In remarks to the Peterson Institute for International Economics on 18 March, the India’s Reserve Bank of India Governor Shantikanta Das wrote that: On issues concerning cryptocurrencies, the risks for financial and monetary stability have been and continue to be extremely high.A key concern cited by Das, who spoke at a virtual event organised by the US think tank, is the ability of cryptocurrencies to sideline central banks’ ability to control the money supply: By undermining the control of money supply by central banks, cryptocurrencies pose risks to the banking system and, therefore, to financial stability more broadly. International coordination and cooperation is essential …therefore, global collective action is imperative, given the cross-border nature of crypto transactions.
Cryptocurrencies, Das pointed out, have an in-built feature intended for breaking through the usual financial mechanisms which could help the central bank control the national monetary system. ‘It can have a cascading effect, creating instability both in the monetary sector and the financial sector,’ he said. The risks posed by cryptocurrencies are such that India, which currently holds the presidency of the G20, ‘could play a leading role in taking this discussion for an international consensus forward on the crypto ecosystem,’ Das said. But India’s work ‘is yet to be completed’.
Source: Economic Times
