India’s Reserve Bank has offered a scathing assessment of cryptocurrencies in its latest financial stability report – saying the risks they create demand attention before they undermine established institutions.
“Cryptocurrencies are a clear danger,” the report baldly declares in its Foreword, penned by Reserve Bank governor Shaktikanta Das. “Anything that derives value based on make believe, without any underlying [value], is just speculation under a sophisticated name.”
The report doesn’t assess cryptocurrency as an immediate danger, noting that crypto assets represent just 0.4 percent of all financial assets and their interoperability with the traditional financial system is “restricted”.
But the Bank sees trouble on the horizon.
“The associated risks are, however, likely to grow as these assets and the ecosystem supporting their growth are evolving,” the report states. “The risks from stablecoins that claim to maintain a stable value against existing fiat currencies require close monitoring, in particular – they are akin to money market funds and face similar redemption risks and investor runs because they are backed by assets that can lose value…
