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The visualization and look and feel of money we all are familiar with, the currency notes and the whole world associated with it from the central bank to money transfers to accumulation of wealth and its cumbersome use. Through currency we are talking of finance. ”The truly revolutionary change in finance seems to have been heralded by Bitcoin.”  Introduced by a person in 2009, who remains anonymous, is managed by a computer algorithm, rather than any person, organization or agency in particular. A complete break from the past. The hard currency as we call it has got diluted in the COVID-19 days, the plastic forms of money, the debit and the credits are also slowly getting into much lesser use. The use of currency will disappear very fast is the prophecy of Author Eswar Prasad in his book, The Future of Money.

The description of the book is ”How the Digital Revolution is Transforming Currency and Finance.” The tenor of the book is that on downslide of physical currency there and the  likelihood that we would lose it pretty fast. The biggest factor which would give the final push would be central bank digital currencies or CBDCs. This is the virtual version of currencies backed by the state. By the end of 2021 RBI is likely to launch trials of its virtual currency. Several countries have got into this race from China to the Bahamas, which launched the Sand Dollar last year. There is unison of thought today on the possibility of providing low cost and efficient digital payment, encompassing the whole population, rich and poor, urban and rural.

The availability of technology to provide us the escape velocity for passage into the cashless world is already there. Digital technology and scalability got married for good, long many years back and we are seeing the fruits of that marriage, in any number of areas today. This makes it harder for us to believe that cash can remain viable for long. The new financial technologies have put the finance world on wildfire, of which crypto currencies take the cake and the icing too. Given the pervasiveness it is gaining, comes the acceptability behind it, the Central Banks are forced to issue their own digital currencies or at the very worst get into the nascent stage of experimenting it.

The magic sauce is of having the digital versions of the Central Bank money available, with the luxury of lowest cost private payment systems.  The author says this would lead to the organic disappearance of cash, we got a peep into in COVID-19, is that the ”convenience of the digital forms of payment substantially override any of the benefits of cash.” CBDCs would help the governments in getting  lots of economic activity in the tax net, currently escaping, given the digital trails, these transactions would leave behind. Digital trails may bring down nefarious use of money. There are also chances that it would bring down cash fueled corruption. Elections would be another area it may impact. Will a cashless world give way to better financial control?


Sanjay Sahay

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