RBI Governor Shatkanta Das said that as the financial system becomes increasingly digital, cyber risks are on the rise and need special attention.
RBI on Cryptocurrencies: Reserve Bank Governor Shaktikanta Das on Thursday described cryptocurrencies as a “clear threat” and said that anything that derives value on the basis of trust, without any underlying, is just speculation under a sophisticated name.
The government is in the process of finalizing a consultation paper on cryptocurrencies after gathering inputs from various stakeholders and institutions. The Reserve Bank of India (RBI) is flagging concerns about cryptocurrencies, which are viewed as highly speculative assets.
In the preface to the 25th issue of the Financial Stability Report (FSR) released on Thursday, Das also said that as the financial system becomes increasingly digital, cyber risks are on the rise and need special attention.
“We should be mindful of the emerging risks on the horizon. Cryptocurrencies are a clear threat. Anything that derives value based on trust without any underlying is merely speculation under a sophisticated name,” Das said.
In recent weeks, cryptocurrencies, which have not bounced back from any underlying value, have seen enormous volatility amid global uncertainties.
The RBI had first issued a circular regarding cryptocurrencies in 2018 and barred entities regulated by it from operating in such instruments. However, in early 2020, the Supreme Court struck down the circular.
While regulatory clarity regarding the cryptocurrency space in the country is yet to emerge, the government is working to finalize a consultation paper on cryptocurrencies with inputs from various stakeholders and institutions, including the World Bank and the IMF.
In the preface to the FSR, Das also said that technology has supported the accessibility of the financial sector and its benefits should be fully harnessed, defended against its potential to disrupt financial stability.
“As the financial system becomes increasingly digital, cyber risks are on the rise and require special attention,” he said. Regarding the economy, he said it is prone to global spillovers and geopolitical tensions.
The Indian financial system exhibits inherent strength and resilience to withstand these shocks. “Our endeavor is to meet all the challenges external and internal with strength and innovative solutions for the Indian financial system,” he said.
A notable feature of the current situation is the overall resilience of Indian financial institutions, which should put the economy in good stead as it strengthens its prospects. This reflects a combination of good governance and risk management practices, he said.
According to him, the stress test results presented in the FSR indicate that banks are well positioned to meet severe stress scenarios without falling below the minimum capital requirement.
He also said that the corporate sector is delivered with strong bottom lines and the external sector is well buffered to face the ongoing conditions of trade shocks and portfolio outflows.
“In a dynamic environment with considerable uncertainty, we are proactive and nimble in our policy responses. We are calibrating our actions for the need of the hour and achieving macroeconomic and financial stability to ensure sustainable and inclusive growth. Trying to keep up,” he said. Told.
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