#IndianDataDollar: A whitepaper (Version 1.0: Second Page)

 

1.0  Introduction

It seems that the 21^st century has delayed its start by twenty years. What happened in the year 2020 is such a categorical shift that it has left territorial borders inadequate constructs for the new world. Whether it is fast-marching virus or internet becoming anchor of global economy; whether it is online education or real-time sharing of genomic data to develop covid vaccines in record time; whether it is the rise of Facebook and Google like corporations capturing the daily data of nearly 3 billion users each or building the privacy framework for all online users, the value shift is simply immense. These problems build a context that is too new to assimilate in a single attempt. However, how to prepare for this is a critical issue. This preparation is both conceptual and institutional. From which point to initiate is the most authentic question for a nation that is serious for its future. There can be many possibilities but our starting point should be the one where we are in control of the choices we can make. That is where the future of money can act as a magnetic discourse that can encompass larger issues involving the future of work, future of territorial borders, future of corporations, future of citizenship and so on. How will the money unfold in coming times is a question that impacts sovereignty as well as a nation’s place in global power architecture. India with a population of over 1.39 billion is in the thick of this paramount challenge. What impact would Indian National Rupee (INR) face if Indians move towards Bitcoin, Ether and thousands of other crypto currencies in a big way? Will INR pivot to a new reserve currency if China wins the currency cold war with the USA? Will Indian currency suffer volatility if Facebook like corporations launch their own corporate stable coins? These are questions too big to ignore. It is high time to treat them with immediate attention.

2.0  Multi-fold challenges before India’s monetary system

India has developed a robust payments infrastructure as it processed 3.24 billion digital transactions in July 2021.  However, domestic payment efficiency does not automatically translate into monetary strength at the global level. The prime reason behind this is that all countries use a common consensus mechanism called “lender-of-the-last-resort” (LOLR) to design money. Whether it is USA, China, Japan, India or any nation, this consensus is a standard method for all of them. But, in its purest form, LOLR consensus is nothing but power in the international political economy. If one assumes the planet earth as a default playing field, nations are like dominant actors. Since these actors enter the field with different levels of power, it ends up creating hierarchy in a default anarchy. ..................................................................................................................................................................................................................................................................................................................................................................................................................................................

2.1  Fall-out of Chinese CBDC (e-CNY) launch

This is where the potential aim of Chinese CBDC (e-CNY) is very critical. A CBDC gives a powerful central bank double advantage. It can bypass the BIS (Bank of International Settlements) managed banking channels dominated by dollar accounts. Secondly, it gives access to both domestic and global partners not only at the institutional level but also peer to peer level. What does it mean in strategic terms? China has already signed currency swap agreements with over 40 countries since 2009. To shift these countries to e-CNY won’t be too difficult for China given the size of debt it has given to many nations...........................................................................................................................................................................................................................................................................................................................

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