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Economist Raghuram Rajan discussed the collapse of cryptography during the annual meeting of the World Economic Forum in Davos, Switzerland.
India's old reserve bank (rbi) governor, as a matter of course, says the decline in the value of digital assets over the past year has placed a strong emphasis on the "real value" of technology.
Rajan says Fiat is more trustworthy.
“Fiat currencies have won out in terms of which is more credible,” he said in Davos.
...former governor rbi raghuram rajan has declared Wednesday. 'the idea that cryptos will somehow hold value, while trust currencies collapse.
That's nonsense," Rajan said on the sidelines of the World Economic Forum's annual meeting in Davos, Switzerland.
— Gurbaksh Singh Chahal (@gchahal) January 18, 2023
“The idea that cryptos will somehow maintain value, whereas fiduciary currencies are collapsing. It doesn't make sense, says Rajan.
BIS Recommends Crypto Policy Action
In 2022, the Three Arrows Capital (3AC) debacle and FTX implosion were two significant blows to the global cryptocurrency market cap. Although the crypto marketplace has recovered over the past week, it remains at a cumulative value of $1 trillion. This represents 50% of capitalization achieved in 2021.
Last year’s second most striking development was undoubtedly the alarming increase in DeFi hacks
Former BIS vice-chairman Rajan has already said that not all cryptocurrencies will succeed in the long run. While avoiding private cryptography, the Bank for International Settlements, a world financial organization, has been using technology in the interim.
BIS officials have stated in the past that central banks should advance the creation of centrally-backed CBDCs. Recently, the CBB has suggested policy measures to address crypto risks.
The recent turmoil in the crypto marketplace underscores the urgent need to address risks. Different lines of action exist, including the issuance of digital currencies from central banks to encourage healthy innovation. #BISBulletin#Crypto#Regulationhttps://t.co/DnI4GXi35Xpic.twitter.com/qVDPSWBBwC
— Bank for International Settlements (@BIS_org) January 12, 2023
The BIS suggested in a Jan. 12 release, “Authorities may consider different – not mutually exclusive – lines of action to tackle the risks in crypto.”
Confinement, regulation, or a complete ban were the institutional options suggested. The organization has also warned in the past that a dispersed blockchain ecosystem may prevent the promise of a payments infrastructure from being realized.
