Indian Central Bank Governor Reiterates Caution on Cryptocurrency Impact on Financial Stability

According to Odaily, Indian Central Bank Governor Shaktikanta Das has reiterated his cautious stance on cryptocurrencies, emphasizing their potential to disrupt the stability of the financial system. Speaking at the Peterson Institute for International Economics' 2024 Macro Week, Das highlighted that cryptocurrencies were created to bypass traditional financial systems. The core issue, he noted, is whether authorities or governments are willing to accept privately issued cryptocurrencies that possess all the characteristics of money. Das argued that the issuance of currency has traditionally been a sovereign function. Allowing cryptocurrencies to flourish could lead to parts of the economy operating outside central bank control, potentially resulting in monetary instability. He elaborated on the risks, particularly how cryptocurrencies could undermine the central bank's ability to manage the money supply, which is crucial for controlling inflation and managing economic cycles. "If the central bank loses control over the money supply in the economy... how will banks check the available liquidity in the system?" Das emphasized that the prevalence of cryptocurrencies could lead to chaos in the financial and monetary systems.