Despite the growing convergence globally towards regulating crypto assets, Reserve Bank of India (RBI) Governor Shaktikanta Das indicated on Friday that the central bank has not changed its previous stance on banning them.
“On crypto, I have stated our position very clearly time and time again, and we continue with the same vision. The International Monetary Fund and Financial Stability Board (IMF-FSB) synthesis document also points out the risks associated with crypto. Regulation always takes place on a scale of zero to ten. Zero regulation means that there is no regulation; it’s free for everyone. Ten means you don’t allow it. Between zero and 10, it depends where you are. The FSB must now look at the granular details of the regulations,” Das told reporters on the sidelines of the Kautilya Economic Conclave.
After the G20 Finance Ministers and Central Bank Governors (FMCBG) adopted the crypto assets roadmap proposed in the synthesis document at the Marrakech meeting earlier this month, the domestic crypto industry was hopeful that the government would now develop a consensus on regulating crypto assets. The RBI’s tough stance could make things difficult. The synthesis paper had argued against a blanket ban on activities related to crypto assets, as it believed that such a measure could be expensive and technically demanding to enforce.
Das hinted that domestic interest rates remain high while monetary policy remains “actively disinflationary.” “We remain extra vigilant about evolving inflation dynamics. However, the outlook for food inflation is surrounded by uncertainties. As our September 2023 survey shows, further progress has been made in anchoring inflation expectations, which reached the single-digit zone for the first time since the COVID-19 pandemic. In the current situation, monetary policy must remain actively disinflationary to ensure that the ongoing disinflation process runs smoothly,” he said in his speech.
Retail inflation fell sharply to 5 percent in September, with 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 so far maintained a pause on the policy rate in the financial year 2023-2024.
Later, Das told reporters that the RBI stands ready to take whatever action is necessary to achieve a sustained, sustained decline in inflation to 4 percent.
Responding to questions about the impact of the war in West Asia, the governor said U.S. bond yields have risen in the past two weeks, which has broader implications for other economies. Talking about high crude oil prices in the international market, Das said, “What matters in India, from an inflation perspective, is the pump prices.”
Das said despite the strengthening of the dollar index, the rupee has remained stable. “From January 1 to now, the depreciation of the rupee is 0.6 percent, while on the other hand, the appreciation of the US dollar during the same period is 3 percent. We are present in the forex market to prevent excessive volatility.” the governor added.
In his address, the Governor said that while the RBI gives priority to price stability, keeping in mind the objective of growth, it considers financial stability as non-negotiable. “We have strengthened our macroeconomic fundamentals and buffers, and these give the economy resilience to withstand major shocks and navigate an increasingly turbulent and uncertain global environment,” he added.