And for a Friday as RBI continues with the pilot projects on e-R, the digital currency, some thoughts….. some musings…..
Central Bank Digital Currency – CBDC, issued by Reserve Bank of India, e-R which currently is at a Pilot testing stage with few banks in 4 cities with selected merchants and customers, is a whole new concept completely different from Cryptocurrencies which has hogged massive headlines World over. Once officially released by RBI, e-R will be legal tender issued in exactly the same denominations as per current cash and coins. The biggest advantage of e-R over currency notes is that of security and will completely eliminate risk of counterfeiting whilst maintaining anonymity just like physical cash including trust, safety and settlement finality. It is a wonderful digital innovation using block chain technology. Cryptocurrency on the other hand is actually not a currency at all. It’s more of an Asset whose demand supply is supposed to determine values. It’s a huge gamble and millions of punters and HNI investors use this as another form of investment. High risks; high rewards. Cryptocurrency is a decentralised form of speculative asset which uses cryptography to secure transactions. Though available globally, it’s still not legal in many countries. Ambiguity prevails in India too. Whilst it is not illegal, it is not supported by RBI nor are the rules framed by the GOI yet. Hence Cryptocurrency highly avoidable e-R is greatly welcome!!!
Cash is King and in India currency in circulation has almost doubled from the time of Demonetisation from 17.74 lakh crores in 2016 to 42.4 lakh crores in 2022. Though undoubtedly Demonetisation has hugely helped formalise major parts of the urban Indian economy and also speeded up the Digitalisation, cash continues to rule big time. Not surprising, since almost the entire Agricultural sector income is out of taxation net and Gold holds its own sway. Gold and Cash are the twin Corruption media which continues to thrive.
India as the fourth largest Economy of the World is poised to a big leap notwithstanding the Global volatility and the innumerable uncertainties. It’s up to each one of us to pave the right path, the transparent way, the productive way, the SEEGOS way.