Governor Shaktikanta Das Concerned about Crypto, Ignores Fiat Currency Instability
Governor Shaktikanta Das has been consistently vocal about his concerns regarding cryptocurrencies. However, he seems to have no views on the instability of fiat currencies despite his stance against crypto. In various public appearances, Governor Das seizes every opportunity to warn about what he perceives as the dangers of cryptocurrencies.
Crypto Risks Acknowledged by IMF and FSB
Governor Das has not wavered in his anti-crypto statements. He recently reiterated his concerns during an interview at the Business Standard BFSI Insight Summit 2023 in Mumbai. He emphasized that there is a consensus on the serious risks that cryptocurrencies pose to the traditional financial system. Governor Das quoted a synthesis paper released by the International Monetary Fund (IMF) and the Financial Stability Board (FSB), stating that countries may consider imposing additional restrictions on cryptocurrencies based on their specific requirements, particularly for emerging markets and developing economies.
The pro-fiat currency stance of the two financial authorities suggests that they would view the imposition of extra restrictions on cryptocurrencies as an ideal outcome.
Lack of Defined Framework for Cryptocurrencies
Governor Das expressed doubts about the definition of cryptocurrencies. He questioned how they should be regulated, whom they should be regulated by, and what needs to be regulated. He stated, “What is this cryptocurrency? Is it a product, a financial product, an asset? If it is an asset, what is underlying that it is not a tangible thing? What is the underlying definition of cryptocurrency? Till now, I am yet to see a credible definition of what cryptocurrency is.”
These remarks highlight the governor’s limited understanding of cryptocurrencies. Furthermore, it is ironic that he questions the tangible nature and underlying value of cryptocurrencies when fiat currencies face similar criticisms. While cash may still be tangible, its underlying value is determined by the State and is subject to rapid debasement.
Unique Advantages of Cryptocurrencies over CBDCs
Governor Das dismissed the purpose of cryptocurrencies by questioning what they can offer in terms of international or domestic transactions in digital form that Central Bank Digital Currencies (CBDCs) cannot. However, cryptocurrencies like bitcoin provide an alternative to government-issued currencies that can be subject to arbitrary inflation, which erodes the purchasing power of citizens.
Additionally, CBDCs have the potential to become powerful surveillance tools for central banks, enabling the enforcement of strict regulations on every citizen.
Private Currency versus Government-Enforced Currency
Governor Das acknowledges that cryptocurrencies are a form of private currency. It is worth noting that the American forefathers also encouraged the use of private currency when they established the US Constitution. However, they did not anticipate the establishment of private central banks like the Federal Reserve, which has been able to print money for the benefit of banks at the expense of the American people.
As the head representative of the Indian central bank, Governor Das has a vested interest in maintaining the current system and cannot endorse any competitors, regardless of their potential benefits for the common citizen.
### News source: cryptodaily.co.uk