Economist Raghuram Rajan brought up the crypto collapse at the World Economic Forum’s annual meeting in Davos, Switzerland.
The former Reserve Bank of India (RBI) governor, as quoted by Reuters, said that the decline in the value of digital assets over the past year brings focus to the “true value” of the technology.
Rajan Says Fiat More Credible
“Fiat currencies have won out in terms of which is more credible,” he said in Davos.
“The idea that somehow cryptos are going to maintain value, while the fiat currencies collapse. That’s nonsense,” said 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. While the crypto market has recovered in the past week, it remains at a cumulative value of $1 trillion. That’s 50% of the capitalization reached 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 steering clear of private crypto, the Bank for International Settlements, a global financial organization, has been utilizing the technology in the meantime.
BIS officials have stated in the past that central banks should advance the creation of centrally-backed CBDCs. Recently, the bank of central banks suggested policy actions to tackle crypto risks.
The BIS suggested in a Jan. 12 release, “Authorities may consider different – not mutually exclusive – lines of action to tackle the risks in crypto.”
Containment, regulation, or a complete ban were the options suggested by the institution. The organization has also warned in the past that a dispersed blockchain ecosystem may prevent the promise of a payments infrastructure from being realized.
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