Economist Raghuram Rajan raised the issue of crypto collapse at the annual meeting of the World Economic Forum in Davos, Switzerland.
The former governor of the Reserve Bank of India (RBI), as quoted by Reuters, said that the decline in the value of digital assets over the past year puts the focus on the “real value” of the technology.
Rajan says Fiat more reliable
“Fiat currencies have won, which is more reliable,” he said in Davos.
“The idea that somehow cryptos are going to maintain value while fiat currencies fall is nonsense,” Rajan said.
BIS Recommends Crypto Policy Action
In 2022, the Three Arrows Capital (3AC) debacle and the FTX implosion were two significant shocks to the global cryptocurrency market cap. While the crypto market has recovered over the past week, it remains at a cumulative value of $1 trillion. It has reached 50% of capitalization in 2021.
The second most important development of the past year was undoubtedly the alarming rise in DeFi hacks.
Former Vice President of BIS, Rajan has already said that not all cryptocurrencies will be successful in the long run. While shying away from private crypto, the Bank for International Settlements, a global financial organization, is meanwhile using the technology.
BIS officials have said in the past that central banks should pursue the creation of centrally backed CBDCs. Recently, the Bank of Central Banks suggested policy actions to combat crypto risks.
“Authorities may consider different – not mutually exclusive – lines of action to address risks in crypto,” the BIS suggested in a January 12 release.
Prevention, regulation, or a complete ban were the options suggested by the body. The organization has also warned in the past that a fragmented blockchain ecosystem could prevent the promise of a payments infrastructure from being realized.
BeInCrypto has reached out to the company or the person involved in the story for an official statement regarding the recent development, but has yet to hear back.