Despite growing convergence globally towards regulating crypto assets, Reserve Bank of India (RBI) governor Shaktikanta Das on Friday indicated that the central bank has not changed its earlier stance of banning them.
“On crypto, I have already spelt out our position very clearly time and again, and we continue with the same view. The International Monetary Fund-Financial Stability Board (IMF-FSB) synthesis paper also points out the risks involved in crypto. Regulation is always on a scale of zero to 10. Zero regulation means there is no regulation; it’s free for all. Ten means you don’t allow it. In between zero and 10, it depends where you are. The FSB now has to look at the granular details of regulation,” Das told reporters on the sidelines of the Kautilya Economic Conclave.
After G20 finance ministers and central bank governors (FMCBG) adopted the roadmap on crypto assets proposed in the synthesis paper at the Marrakech meeting earlier this month, the domestic crypto industry was hopeful that the government will now develop a consensus towards regulating crypto assets. The RBI’s tough stand may make it difficult. The synthesis paper had argued against a blanket ban on activities linked to crypto assets, holding that such a move could be costly as well as technically demanding to enforce.
Das hinted towards domestic interest rates remaining high, 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, monetary policy must remain actively disinflationary to ensure that the ongoing disinflation process progresses smoothly,” he said in his speech.
Retail inflation has moderated sharply to 5 per cent 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 maintained a pause on policy rates in financial year 2023-24 so far.
Later, Das told reporters that the RBI stands ready to take whatever action needs to be taken to see a persistent, sustained decline in inflation to reach 4 per cent.
Responding to queries on the impact of war in West Asia, the governor said that in the last fortnight, the US bond yields have risen, which has wider implications for other economies. On elevated 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 dollar index strengthening, the rupee has been stable. “From January 1 till 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 governor added.
In his speech, the governor said that while according priority to price stability, keeping in mind the objective of growth, the RBI treats financial stability as non-negotiable. “We have strengthened our macroeconomic fundamentals and buffers, and these are imparting resilience to the economy to withstand large shocks and navigate in an increasingly turbulent and uncertain global setting,” he added.