New Delhi: Union finance minister Nirmala Sitharaman said the Reserve Bank of India (RBI) is in favor of banning cryptocurrencies because it is concerned about their destabilising effect on monetary and fiscal stability.
“In view of the concerns expressed by RBI on the destabilising effect of cryptocurrencies on the monetary and fiscal stability of a country, RBI has recommended framing of legislation on this sector. RBI is of the view that cryptocurrencies should be prohibited,” she told the Lok Sabha in a written reply to a query on this matter.
The finance minister added that effective legislation on this matter is possible only through international collaboration. “Cryptocurrencies are by definition borderless and require international collaboration to prevent regulatory arbitrage. Therefore, any legislation for regulation or for banning can be effective only after significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards,” she said.
Currently, cryptocurrencies are unregulated in India and the government is in the midst of consultations to draft a legislation regulating them. RBI has been apprehensive about cryptocurrencies because of their cryptic nature and absence of any intrinsic value.
The cause of cryptocurrencies hasn’t been helped in India by a slew of so-called crypto exchanges, many playing their business online, and soliciting customers through mass media advertising promising superlative returns — a strategy that helped them rapidly grow their business, even across small towns.
The crypto crash of the past few months has served up a dose of reality to customers, at least some of whom do not really understand crypto currencies and saw them as instruments that could generate high returns.
“RBI has been cautioning users, holders and traders of Virtual Currencies (VCs) vide public notices on December 24, 2013, February 01, 2017 and December 05, 2017 that dealing in VCs is associated with potential economic, financial, operational, legal, customer protection and security related risks,” Sitharaman said.
IMF to cut global growth outlook ‘substantially’
New York: The International Monetary Fund will cut its global economic growth outlook “substantially” in its next update, as finance chiefs grapple with a shrinking list of options to address the worsening risks.
Surging food and energy prices, slowing capital flows to emerging markets, the ongoing pandemic and a slowdown in China make it “much more challenging” for policymakers, Ceyla Pazarbasioglu, the IMF’s director for strategy, policy and review, said in Bali, Indonesia. “It’s shock after shock after shock which are really hitting the global economy.”
She spoke after the Group of 20 finance ministers and central bank governors ended their meeting on Saturday without reaching a communique, underlining the difficulty in coordinating a global response to surging inflation and recessionary fears.
The IMF already downgraded its outlook for the global expansion this year to 3.6%, from 4.4% before the war in Ukraine, in its April report. In a review due this month, “we will downgrade our forecast substantially,” Pazarbasioglu said.