India’s central bank, the Reserve Bank of India (RBI), sees cryptocurrencies as “a clear danger.” However, the financial stability risks posed by crypto assets currently appear to be “limited.”
The Reserve Bank of India (RBI) released the 25th issue of its Financial Stability Report (FSR) Thursday. RBI Governor Shaktikanta Das wrote:
Cryptocurrencies are a clear danger. Anything that derives value based on make believe, without any underlying, is just speculation under a sophisticated name.
The RBI chief further opined: “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.”
The Indian central bank’s report explores financial stability risks posed by crypto assets, citing various studies, including the work by the Financial Stability Board (FSB). The report states:
The risks from cryptoassets to financial stability appear to be currently limited as the overall size is small (0.4 per cent of global financial assets).
In addition, it notes that crypto’s “interconnectedness with the traditional financial system is restricted.”
Nonetheless, the report adds:
The associated risks are, however, likely to grow as these assets and the ecosystem supporting their growth are evolving.