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Digital Fiat Currency: Overthrowing Hindu Rashtra

Peoples Voice on October 16, 2017 - 7:43 pm in Economics
Anandi Sharan
Writer, Climate Change Activist

International Telecommunications Union Meet on Digital Fiat Currencies

India was nowhere to be seen at the International Telecommunications Union meet up digital fiat currencies in Beijing on 12 October 2017. Whereas BJP Hindu Rashtra punishes the people for using our own paper notes and crashes the economy, the People’s Bank of China is developing digital fiat currency with the aim, over time, of always having enough currency in cash, note and digital form and ultimately debarring private banks from engaging in electronic financial transactions except by using the sovereign e-currency.

Such sovereign control over all forms of currency, not only coins and notes as today, but including e-currency, can quickly ensure 100% eradication of poverty through direct payments into citizen’s accounts, at the same time as controlling much more strictly the purposes for which credit is given by banks.

If India had a digital fiat currency it would not only be acting constitutionally with respect to legal tender for the first time in 70 years since Independence by removing the power to create money from private banks, but it would also make financial inclusion a meaningful concept. People don’t have bank accounts not because we don’t have accounts but because we don’t have money. The purpose of financial inclusion should of course be not to get us to create a bank account with a private bank for the sake of it, but to enable all citizens to hold accounts with the central bank i.e. Reserve Bank of India directly, or hold money issued directly by the central bank in our accounts in any bank.  We should receive the electronic fiat currency directly into our accounts and e-wallets as well as in cash and notes as a universal basic income or whatever other name the universal citizen’s liquidity funds will be called. We would then actually have the money to pay taxes to the Gram Panchayat for example; it would enable us to make the provisions of the 73rd constitutional amendment a reality. Apart from equitable access to land the other sine qua non of right to life is equal access to money. The technological means exists to provide it.

In six wonderfully pithy and hugely tongue in cheek six slides Ziheng Zhou, professor at the Chinese Academy of Sciences asserted the revolutionary implications of digital fiat currencies for developing countries. “1. Theoretically, there exists a huge gap in the financial sector between the developing economies and developed economies. We can call it financial gap (i.e., foreign exchange constraints and savings gap). The gap is the reason and also the result about being developing or developed, but not the solution. In other words, there is no way to fill in the gap in the old way, and even in the old time. 2. The gap is physical one, but not a digital one. So does with (goes with?, does away with?) with the concept of being the developed and developing economy.  3. In the digital time, it is hard to believe that the developed economies will still take the leading position of finance globally and forever. The developing economies and developed ones are sharing the same technology resource now, but it is easier

for the developing economy to take a great leap, and then to catch up with the developed economy, especially in area of the inclusive finance. 4. As far as digital fiat currency (DFC) is concerned they are on the same starting point, and the developing economies are much more enthusiastic to take the solid steps by their authorities. 5. In fact, it is more likely that the developing economies will issue the DFC first. 6. DFC will fill the financial gap between the developing

economy and developed economy. Thank you all.” There were presentations by Egypt, Tanzania, Pakistan, Mexico, Burundi and of course China. As in everything, so in the immensely important question of digital fiat currency: China goes where India fears to tread. The Bank of England recently introduced a pilot fiat digital currency that drew the praises of the Chinese participants. With a DFC Bihar’s 7636 crore request for flood relief could be organised by the central

government in a flash. GDP would be revealed as meaningless because what matters is not only currency in circulation per se, it can be added at any time, but equality, fraternity and liberty and justice. Sadly BJP and INC are too dumb to follow up. Too busy sucking up to their American Masters of Business Administration party political funders I guess. Given RBI has not even indigenised note printing it is unlikely they will bother with DFC either. Rather stay a developing country forever.

Watal Committee Report: Overthrowing Hindu Rashtra

It does not have to be so. The Watal Committee was asked to look into digital currency. It reported in December 2016 that “in the course of consultations, the Committee was presented with a case for digitally issued Indian currency, as a means to substitute physical currency. Central bank issued digital currency seeks to retain the characteristics of central bank issued M0 currency, but merely change the form factor from paper to digital. Such a digital currency would have to be issued by the RBI, and used by way of hardware modules. The security of the currency is ensured by cryptographic technology, inspired by existent security features on physical currency. The Committee notes that several benefits of digital currency, including the instantaneous settlement of transactions, reduction of costs of cash, ability to provide a more comprehensive and unified source of credit history and reduction in instances of tax avoidance. The most significant benefit however, is that the technology makes it extremely difficult to counterfeit, and more importantly enables the central bank to detect the existence of counterfeit currency on a real-time basis.”

This is not about replacing coins and notes but adding more sovereign debt free money into the system faster than can be done only with notes.

The money machine that makes the creation of the RBI’s digital currency possible was presented in a separate talk uploaded on the internet by the same member of the International Telecommunications Union focal group on digital fiat currency (DFC) who submitted his views to the Watal committee. One of the things the machine does is to ensure that serial numbers of digital currency in a certain denomination are tracked and identified even when broken into two parts. There are all sorts of features that make the electronic transactions traceable and accountable in real time, provided there is electricity. Representatives of dozens of central banks developed it in a joint effort.

So the question is, why is the BJP stalling on replacing, or shall we say “transitioning” private and nationalised bank issued electronic money to RBI issued digital fiat currency, when the technology exists and a committee has recognised its usefulness? Why did it punish us by withdrawing cash, instead of adding electronic money to notes and coins as its sovereign issued legal tender in a way that is helpful to all citizens?

The answer may of course be that such a move is basically akin to switching the money system to a 100% reserve system. And if you have such a system you have to have the political guts to figure out what humans and earth actually need money for. Politicians can no longer hide behind “the economic climate” created in a god given way by the private banks of the US Federal Reserve system and enforced militarily and through Stockhom syndrome on developing countries including India but excluding China through the Washington consensus.  Because with digital fiat currency the central bank, the government and the money system are inextricably one, and the life and death of human beings and the earth once more rest fair and square with the political authority of the country.

This is precisely what the IMF examined in 2012 paper “The Chicago Plan Revisited” and which Ambrose Evans Pritchard in his review of the paper in his Telegraph London article entitled “IMF’s epic plan to conjure away debt and dethrone bankers: So there is a magic wand after all. A revolutionary paper by the International Monetary Fund claims that one could eliminate the net public debt at a stroke.”

Obviously Hindu Rashtra ideologues do not have equality, fraternity justice and liberty of all Indians at heart, which is why they do not see the constitutionally vital implications of adding the digital fiat currency to the sovereign fiat coins and notes being issued by the RBI at present.

It is impossible for private money based on profit to provide the kind of debt free self-owned money that people need to cope with man-made global warming, poverty, biodiversity loss and landlessness.

Let’s hope the BJP are booted out soon and socialists win the majority in Parliament in 2019 so that the work of eradicating inequality amongst humans and other living things in India generally and Bihar especially in the conditions of man-made climate change can be done in earnest.

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