RBI Governor Shaktikanta Das sticks to stand on crypto assets ban

G20 recently adopted road map on such assets

Reserve Bank of India (RBI) Governor Shaktikanta Das sought to reaffirm on Friday that the central bank’s stance on banning crypto assets remained unchanged despite a global trend towards regulating them.

“On crypto, I have already spelt out our position very clearly time and again and we continue with the same view. The IMF-FSB (International Monetary Fund-Financial Stability Board) synthesis paper also points out the risks involved in crypto. Regulation is always on a scale of zero to 10. Zero regulation will mean that there is no regulation, it’s free for all, and 10 means you don’t allow it. In between zero and 10, it depends on where you are. FSB now has to look at the granular details of regulation,” Das told reporters on the sidelines of the Kautilya Economic Conclave 2023 here.

 

Following the adoption of a road map on crypto assets in the synthesis paper by G20 finance ministers and central bank governors at a meeting in Marrakech earlier this month, the domestic crypto industry had hoped for the government to work towards a consensus on regulating crypto assets. However, the RBI’s firm stance may complicate matters. The synthesis paper had argued against a blanket ban on activities linked to crypto assets, suggesting that such a move could be costly and technically challenging to enforce.

In the past, Das had stressed the need for an outright ban on cryptocurrencies.

In his speech, Das hinted at high domestic interest rates, with monetary policy remaining "actively disinflationary". “We remain extra vigilant on the evolving inflation dynamics. The outlook on food inflation, however, is beset with uncertainties. As evident from our survey of September 2023, there is further progress on anchoring inflation expectations which entered the single-digit zone for the first time since the Covid-19 pandemic. In the current situation, the monetary policy must remain actively disinflationary to ensure that the ongoing disinflation process progresses smoothly,” he said.

Retail inflation has sharply moderated to 5 per cent in September amid a correction in vegetable prices. After raising the policy repo rate by 250 basis points cumulatively between May 2022 and February 2023, the RBI has maintained a pause on policy rates, so far, in FY24. Later, Das told reporters the RBI was prepared to take necessary action to achieve a persistent, sustained decline in inflation to reach the 4 per cent mark.

Asked about the impact of the war in West Asia, the central bank governor noted that US bond yields have risen in the last fortnight, which has wider implications for other economies. He also commented on elevated crude oil prices in the international market, stating that “what matters in India (from an inflation perspective) is the pump prices”. Das said despite the dollar index strengthening, the rupee has been stable. “From January 1 until now, the rupee depreciation is 0.6 per cent, whereas, on the other side, the appreciation of the US dollar for the same period has been 3 per cent. We are there in the forex market to prevent excessive volatility," the RBI governor said. In his speech, Das emphasised that while prioritising price stability with growth objectives in mind, the RBI treats financial stability as non-negotiable.