Cryptocurrencies will not work in emerging economies like India, according to the central bank governor
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Answer Cryptocurrencies will not work in emerging economies like India, according to the central bank governor
In a recent interview, Reserve Bank of India Governor Shaktikanta Das said:
Countries like India are in a different situation from advanced economies when there is talk of dollarization of the economy…
Unintended “dollarization” of the economy:
The Governor of the Reserve Bank of India stated:
It is not good for our economy to happen.
Therefore, for emerging market economies, since all cryptocurrencies are largely denominated in hard currencies especially the dollar, it will not work for countries like India.
He added:
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The crypto market may work in favor of advanced economies.
The remarks of the Governor of the Reserve Bank of India are particularly important in light of the recent KuCoin report which shows that in addition to the 115 million investors currently in the crypto market, the majority of Indian investors intend to increase their holdings in the near future.
Also in May, the central bank warned a parliamentary committee that cryptocurrencies, especially stablecoins, could lead to an unintended “dollarization” of the economy.
The central bank chief also sees that while they are supporting innovation in fintech, the Reserve Bank of India will also assess the types of risks that exist in the sector and check if they are being managed well.
In the past, the country’s central bank has hinted that it is unlikely to change its negative stance on virtual digital assets (VDAs) due to the financial stability concerns it raises in the economy along with money laundering risks.
This month, the Indian Enforcement Department (ED) also banned banking assets belonging to the troubled cryptocurrency platform Fold and one of the directors of the operator WazirX Zanmai Lab Private Ltd.
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Where they are being investigated for money laundering.
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