The Governor of the Reserve Bank of India reiterated a cautious stance on cryptocurrencies, stating that they could undermine the stability of the financial system

ChainCatcher news, Reserve Bank of India Governor Shaktikanta Das reiterated a cautious stance on cryptocurrencies, stating that they have the potential to undermine the stability of the financial system.

Das recently spoke at the Peterson Institute for International Economics' 2024 Macro Week, where he mentioned that the creation of cryptocurrencies is intended to bypass the traditional financial system. The fundamental issue is whether authorities or governments are willing to accept privately issued cryptocurrencies that possess all the characteristics of money.

He believes that issuing currency is traditionally a sovereign function. Allowing cryptocurrencies to flourish could detach parts of the economy from central bank control, a shift that could lead to monetary instability.

He further elaborated on the risks, particularly how cryptocurrencies could weaken 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 can banks check the available liquidity in the system?" Das emphasized that if cryptocurrencies become prevalent, the financial and monetary systems could face chaos.