'Cryptocurrency is a huge risk to financial stability', said Shaktikanta Das in Washington

Shaktikanta Das, the Governor of the Reserve Bank of India (RBI), described cryptocurrencies to be a huge risk to monetary and financial stability. On Saturday, while he was in Washington, he said that this could create a situation where the central bank will lose control over the money supply in the economy. 

Das said, "I think this is something that should not be allowed to dominate the financial system. It is a huge risk insofar as financial stability is concerned. It is a huge risk to monetary stability. It is also a threat to the banking system.''

It can also create a situation where central banks will lose control over the money supply in the economy," Shaktikanta Das said at the leading think-tank Peterson Institute for International Economics. If, according to the central banks, they lose control over the money supply in the economy, how will the cash available in the system be checked.

The governor of RBI went further to say, "The central bank controls the supply of money hard in time of crisis to prevent inflation. So, in our view, cryptocurrency is a big risk.".

On a specific question, Shaktikanta Das said an international understanding on cryptocurrency as it also has cross-border transactions. The governor of the central bank said in repetition, "One should be extra aware of the big risks that come along with cryptocurrency. I think it is not something to be encouraged. It is an unpopular view but I feel that this is a big concern for central banks all over the world as guardians of financial stability." Das said governments too are increasingly becoming aware of the negative risks in cryptocurrencies.