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Crypto Assets Do Not Pose Risks To Financial Stability: Reserve Bank Of India

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The Reserve Bank of India (RBI) in a report said cryptocurrencies such as Bitcoin and other crypto-assets currently do not pose risks to global financial stability. This was revealed in a document published by the RBI recently titled "Report on Trend and Progress of Banking in India 2017-18."

The report included an initial assessment of the Financial Stability Board (FSB) that "crypto-assets do not pose risks to global financial stability currently." The assessment by the Financial Stability Board (FSB) was made after undertaking a review of the financial stability risks posed by the rapid growth of crypto-assets.

The FSB is an international body that monitors and makes recommendations about the global financial system. It was established after the G20 London summit in April 2009 as a successor to the Financial Stability Forum. The FSB has been analyzing the potential financial stability implications of crypto-assets.

The FSB is quoted in the report as saying that this initial assessment could change if crypto-assets were to become more widely used or interconnected with the core of the regulated financial system as the market continues to evolve rapidly.

The report says, "Cryptocurrencies need constant monitoring on overall financial stability considerations, given the rapid expansion in their usage."

Although not banned by law, cryptocurrency trading has been subject to tight scrutiny in India, which is yet to form a legal framework for cryptocurrencies.

However, the RBI had banned the country's commercial banks from providing banking services to businesses or individuals dealing in cryptocurrencies such as Bitcoin that came into effect on July 6, 2018.

Blockchain developers, services providers, and companies dealing in cryptocurrency trading in India have been migrating to crypto-friendly destinations or are seriously considering options in the wake of increasingly hostile ecosystem in the country.

In April, the RBI had initially considered launching its own central bank digital currency called "Laxmi" as a stablecoin tied to the rupee. However, it shelved the idea later saying it's too early to even think about it.

Meanwhile, India's Financial Stability and Development Council or FSDC was also considering a blanket ban on the use of private cryptocurrencies in the country. However, the Council planed to encourage the use of blockchain.

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