NEW DELHI: Reserve Bank of India (RBI) Governor Shaktikanta Das said on Friday that cryptocurrency trading should be banned in the country as it is completely based on speculation and is similar to gambling.
Speaking at a session during the Business Today Banking and Economy Summit, Das reiterated the central bank’s view on cryptocurrency and said it should be banned. “RBI’s position on crypto is very clear – it should be banned,” he said.
While the central bank governor said blockchain technology needs to be supported because of its various applications, he believes that cryptocurrency does not have any underlying value.
“Some people call cryptocurrency an asset, some call it a financial product, but every asset or financial product needs to have an underlying value. But cryptocurrency does not have any underlying value,” the RBI governor said.
He went on to say that the market price of cryptocurrencies is based on nothing but speculation and is similar to gambling. “Anything whose valuation is dependent entirely on make believe is nothing but 100 per cent speculation, or to put it bluntly, it is gambling,” Das said.
“In our country, we don’t allow gambling. If you want to allow gambling, treat it as gambling and lay down the rules,” he added. However, Das maintained that cryptocurrency is not a financial product and added: “Cryptocurrency masquerading as a financial product or a financial asset is a completely misplaced argument.”
‘Crypto will lead to dollarisation of economy’
Shaktikanta Das also said that allowing cryptocurrency trade in the country would also undermine the authority of the central bank. “The Reserve Bank, being the monetary authority of the country as the central bank, will lose control over the money supply in the economy.”
He said the central bank will also lose its ability to decide the monetary policy, liquidity and money supply level that needs to be maintained in the economy.
“It will undermine the authority of the RBI and lead to the dollarisation of the economy,” Das said. “These are not empty alarms or signals. A year ago, we said this whole thing (cryptocurrencies) is likely to collapse sooner than later and if you see the developments, I think I don’t need to add anything more,” he added.
The RBI governor also spoke about the central bank’s role in steering the economy through difficult times, starting with the Covid-19 pandemic and then the global economic slowdown triggered by a host of external factors. He highlighted how the RBI constantly monitored the situation during Covid-19 and thereafter, and focused on growth while keeping a watch on inflation and other areas of concern.
“We wanted the economy to have a safe landing in FY22, and the GDP to be above pre-pandemic levels. Looking back today, it gives us great satisfaction that economic growth was 8.7 per cent in FY22. Our projection for the ongoing financial year is 6.8 per cent,” Das said.
“The economy has not only landed safely, but has remained resilient notwithstanding this huge amount of global spillovers emanating because of the Russia-Ukraine war, geopolitics and the synchronised monetary policy tightening, especially by the US Fed and other advanced economies,” he added.
“I think we have kept the objective of growth, which had to be given primacy during pandemic times and thereafter. We have not lost sight of the need to focus on inflation.”