Tag: cryptocurrencies

Cryptocurrencies Pose Risks to Emerging Markets, Central Bank’s Stand Remains Unchanged: RBI Governor

Cryptocurrencies can pose significant risks to emerging markets, the Reserve Bank of India (RBI) chief said on Thursday, cautioning that the central bank’s stand on the issue remains unchanged despite wider acceptance in other countries.

“Our position, my position and the RBI’s position on this (cryptocurrencies) remains unchanged irrespective of who does what,” Shaktikanta Das said in response to a question about the US securities regulator approving the first US-listed exchange traded funds to track Bitcoin, a move that could bolster the world’s largest cryptocurrency and the broader crypto industry.

“For emerging market economies and for advanced economies also, travelling down that path will create huge risks which will be very difficult to contain going forward,” Das added.

Cryptocurrencies have no underlying value and pose risks for macroeconomic and financial stability, the central bank chief has repeatedly said.

RBI Governor Das highlighted the benefits of the central bank digital currencies, or e-rupee in India’s case, and said the central bank is working on “programmability” of the e-rupee to enable cash transfers, such as targeted transfers to farmers.

The central bank also plans to start pilots for using the e-rupee in new segments in the wholesale space, he added.

In December, Indian banks disbursed some employee benefits through the digital rupee, helping the RBI meet its target of one million daily transactions by end-2023, three sources directly familiar with the development said last week.

The RBI and the National Payments Council of India are in talks with several countries for adoption of India’s payments system Unified Payments Interface for cross-board transactions, the governor said Thursday.

Das also said the central bank is closely looking at model-based artificial intelligence lending by financial entities.

© Thomson Reuters 2024

Affiliate links may be automatically generated – see our ethics statement for details.

Catch the latest from the Consumer Electronics Show on Gadgets 360, at our CES 2024 hub.

Check out our Latest News and Follow us at Facebook

Original Source

Cryptocurrencies a ‘Clear Danger’, Warns RBI Governor Amid Global Crypto Uncertainty

Reserve Bank Governor Shaktikanta Das on Thursday described cryptocurrencies as “clear danger” and said that anything that derives value based on make believe, without any underlying, is just speculation under a sophisticated name.

The government is in the process of finalising a consultation paper on cryptocurrencies after gathering inputs from various stakeholders and institutions.

Reserve Bank of India (RBI) has been flagging concerns about cryptocurrencies, which are seen as a highly speculative asset.

In the foreword to the 25th issue of the Financial Stability Report (FSR) released on Thursday, Das also said that as the financial system gets increasingly digitalised, cyber risks are growing and need special attention.

“We must be mindful of the emerging risks on the horizon. Cryptocurrencies are a clear danger. Anything that derives value based on make believe, without any underlying, is just speculation under a sophisticated name,” Das said.

In recent weeks, cryptocurrencies, which are not back by any underlying value, have witnessed massive volatility amid global uncertainties.

RBI first come out with a circular regarding cryptocurrencies in 2018 and had barred entities regulated by it from dealing in such instruments. However, in early 2020, Supreme Court struck down the circular.

While regulatory clarity is yet to emerge with respect to the cryptocurrency space in the country, the government is working to finalise a consultation paper on cryptocurrencies with inputs from various stakeholders and institutions, including the World Bank and the IMF.

In the foreword of the FSR, Das also said that while technology has supported the reach of the financial sector and its benefits must be fully harnessed, its potential to disrupt financial stability has to be guarded against.

“As the financial system gets increasingly digitalised, cyber risks are growing and need special attention,” he noted.

Regarding the economy, he said it is skewed towards global spillovers and geopolitical tensions.

The Indian financial system exhibits underlying robustness and resilience to withstand these shocks. “Our endeavour is to face all challenges, external and internal, with strength and innovative solutions for the Indian financial system,” he added.

A noteworthy feature of the current situation is the overall resilience of Indian financial institutions, which should stand the economy in good stead as it strengthens its prospects. This reflects a combination of good governance and risk management practices, he said.

According to him, the stress test results presented in the FSR demonstrate that banks are well positioned to withstand even severe stress scenarios without falling below the minimum capital requirement.

He also said that the corporate sector is deleveraged with stronger bottom lines and the external sector is well-buffered to withstand the ongoing terms of trade shocks and portfolio outflows.

“In a dynamic environment with considerable uncertainty, we have been proactive and nimble footed in our policy responses. We have been calibrating our actions to the need of the hour and striving to preserve macroeconomic and financial stability to ensure sustainable and inclusive growth,” he said.

Check out our Latest News and Follow us at Facebook

Original Source

Exit mobile version