The Reserve Bank of India said in its March 2022 Bulletin that the ongoing geopolitical crisis, i.e. the war between Russia and Ukraine, has increased the uncertainty that is clouding the global macroeconomic and financial landscape.

The global economy’s recovery from the Covid-19 pandemic is incomplete and rising oil and gas prices and uncertain market conditions are now creating new headwinds, it said.

However, the Indian economy is making steady progress on the domestic front, it says. “India’s macroeconomic fundamentals remain strong. The unfolding global developments nevertheless pose downside risks in terms of spillovers,” the bulletin reads.

RBI has emphasized that consumer and business confidence is improving alongside an improvement in demand conditions. “On the supply side, a resilient agricultural sector and sustainable recovery in both industrial and service sectors are broadening the recovery.”

RBI also said a quick and large withdrawal of fiscal support risks pushing the economy over the cliff into a sharp downturn. “Retiring policymakers face the sharp tradeoff between cliffs and slopes,” RBI added.

‘Cryptotechnology supported to evade government controls, forbidding a recommended option’

The bulletin has highlighted that cryptocurrencies are typically global products whose defining characteristic is that they are beyond official control and cannot be regulated by country-specific regulators. RBI further laid out the rationale for keeping cryptocurrencies “away from the formal financial system.”

“Cryptocurrencies have been specifically developed to circumvent the regulated financial system. This should be reason enough to treat them with caution,” RBI says.

It goes on to say that banning cryptocurrencies is the most recommended option available. “Banning cryptocurrency is perhaps the most advisable choice for India. We examined the arguments advanced by those advocating for regulation of cryptocurrencies and found that none of them stand up to basic research.

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