Indian central bank chief says crypto could cause a crisis

Indian central bank governor Shaktikanta Das said earlier today that crypto should be banned, and if allowed to grow, might cause the next financial crisis.

Speaking at the BFSI Insight Summit 2022, Royal Bank of India Governor Shaktikanta Das gave a speech where he highlighted that if crypto is not banned, and is allowed to grow, then he sees it causing the next financial crisis.

With the Indian government preparing to regulate cryptocurrencies, Das echoed the words of other central bankers and leaders of global financial bodies when he said that crypto had no underlying value and that it posed a risk for macroeconomic and financial stability.

As reported by The Indian EXPRESS, the banker warned:

“Mark my words, next financial crisis will come from private cryptocurrencies…After FTX episode, don’t think we need to say anything more on crypto,” 

The governor stated that crypto came out of an idea to replace or bypass the banking system, and that adherents to crypto didn’t believe in a regulated financial world. He said:

“They don’t believe in the central bank, they don’t believe in a regulated financial world. I’m yet to hear a good argument about what public purpose it serves,”  

He went on to share his view that crypto should be banned and what he thought might happen should crypto be given the legitimacy of regulation:

“It should be prohibited because if it is allowed to grow … say it’s regulated and allowed to grow … please mark my words that the next financial crisis will come from private cryptocurrencies,” 

Opinion

Governor Das is the leader of the RBI, the Indian central bank. As such he is duty bound to defend his bank and also the fiat monetary system of which he and his bank are a pillar.

If crypto survives and starts to grow again, it will put pressure on the banking industry given that the current state of the fiat monetary system could be likened to a huge house of cards ready to fall in on itself.

People will want to get out and be able to put their wealth into something that is not state controlled and thereby open to all sorts of mismanagement, and which doesn’t rob them of huge chunks of their purchasing power at an ever-increasing rate.

With the exception of Bitcoin, most cryptocurrencies have still not done the job of providing a bomb proof shelter against financial loss, even though many innovations have come out of them.

However, this kind of entrepreneurialism and innovation needs to continue given that all that is going to come out of the banking system are central bank digital currencies (CBDCs).

If central banks can enforce this system then monetary freedom will be lost. Governor Das is using his position to cast mud into already muddy waters in an effort to strengthen public perception that crypto is not to be trusted. With the system’s all but total control over mainstream media, his job is that much easier.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.