Raghuram Rajan, former chairman of RBI. file | photo credit: file photo
The fall in digital asset prices over the past year will allow investors to focus on the “true value” of this new technology, distributed ledgers and the smart contracts that can be built on them, former RBI governor Raghuram Rajan said on Wednesday. Said to
“The idea that somehow cryptos are going to maintain value while fiat currencies fall. That’s nonsense,” Rajan said on the sidelines of the World Economic Forum’s annual meeting in Davos, Switzerland.
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“Fiat currencies have won, which are more reliable,” he said in an interview with Reuters Global Markets Forum.
The broader crypto market is set to lose $1.4 trillion in 2022, with bitcoin losing 60% of its value. However, it posted a 26% gain in January, jumping 22% in the past week, breaking the $20,000 level, putting it up for its best month since October 2021.
Cryptocurrencies took a credibility hit in November when crypto exchange FTX, which was valued at $32 billion a year ago, filed for bankruptcy protection in November and US prosecutors accused its founder Bankman-Fried of an “epic” fraud. The allegation was made, which could cost investors. customers and lenders billions of dollars.
Mr Rajan expects the US Federal Reserve to keep raising interest rates for now while it looks for any signs of slack in the labor market.
“When you still have 200,000 jobs (being created) a month, it suggests there is still a way to go,” he said.
Mr Rajan believes a mild recession will not pose a problem for the US central bank as the Fed believes it can cut rates to allow the economy to recover.
However, one cause for concern could be that labor markets were tight because no one wanted to lay off people, given how difficult it was to initially hire them, he said.