Referring to cryptocurrencies as a “clear danger”, Reserve Bank of India Governor Shaktikanta Das said anything that derives value based on make-believe is just speculation under a sophisticated name.

“While technology has supported the reach of the financial sector, its benefits must be fully harnessed, its potential to disrupt financial stability has to be guarded against. As the financial system gets increasingly digitalised, cyber risks are growing and need special attention,” Das said in the foreword to the RBI’s Financial Stability Report, June 2022.

According to the report, the Indian financial technology industry, among the faster growing globally, was valued at $50-60 billion in 2020 and is projected to hit $150 billion by 2025.

At 87 per cent, India has the highest fintech adoption rate globally, receiving funding of $8.53 billion in 278 deals during 2021-22, the RBI said in the report.

While the RBI acknowledged the use of financial technology as a tool to promote financial inclusion, the central bank warned in the report that the advent of the new technology has also exposed the banking system to previously unseen risks.

These risks extend beyond prudential issues and often intersect with other public policy objectives relating to safeguarding of data privacy, cyber security, consumer protection, competition and compliance with Anti Money Laundering policies, the RBI said in the report.

“Bigtechs can scale up rapidly and pose risk to financial stability, which can arise from increased disintermediation of incumbent institutions,” the central bank said.

“Moreover, complex intertwined operational linkages between bigtech firms and financial institutions could lead to concentration and contagion risks and