Meh. The article expends <i>zero effort</i> in actually engaging with the Reserve Bank of India's motivations or the CBDC design [1], and is filled with shallow comments about the roll-out in other countries.<p>This is a very important topic as it has the potential to reshape banking/economics on the timescale of decades. For a good down-to-earth understanding of "layer 1" -vs- "layer 2" money, refer the following post [2]. India's digital payments ecosystem (the "UPI") has been an unparallelled success at the second layer. Beyond that, there are many motivations that make it potentially interesting to consider digital layer 1 money -- starting with the costs of managing paper money, reducing settlement risk, potentially smoothing cross-border payments, the possibility of setting negative interest rates, etc. There are definitely pros and cons, but I'm yet to find a comprehensive and well thought-out analysis (and would appreciate any links!), especially in the Indian context.<p>[1]: RBI Concept Note on CBDC: <a href="https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/CONCEPTNOTEACB531172E0B4DFC9A6E506C2C24FFB6.PDF" rel="nofollow">https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/CONC...</a><p>[2]: <a href="https://brettscott.substack.com/p/casino-chip-cashless-society" rel="nofollow">https://brettscott.substack.com/p/casino-chip-cashless-socie...</a>
Remind me about <a href="https://en.wikipedia.org/wiki/2016_Indian_banknote_demonetisation" rel="nofollow">https://en.wikipedia.org/wiki/2016_Indian_banknote_demonetis...</a><p>> On 8 November 2016, the Government of India announced the demonetisation of all ₹500 and ₹1,000 banknotes<p>> Several people were reported to have died from standing in queues for hours to exchange their demonetised banknotes.[180][181][182][183][184][185] Deaths were also attributed to lack of medical help due to refusal of demonetised banknotes by hospitals.[186][187][188]<p>> The exchange of banknotes was stopped completely on 25 November, although the government had previously stated that the volume of exchange would be increased after that date.<p>> The push for digital payments was one of the stated intentions of demonetisation.<p>So if someone missed this 17 days or has not managed to exchange their funds - then they would lost all their cash they were holding using demonetized banknotes.
One of the greatest strengths that both China and India have is that the West will never understand them.<p>The West will think they understand them. They will assume they understand them. They will be sure they understand them. But they will never understand them.<p>Hence the implication in the headline (well-written headline, by the way), that if nobody else uses it, India is wasting its time.<p>The same people said about UPI (Modi's digital payments push):<p>- hardly anyone has cellphones in India<p>- it'll take years to train India's illiterate masses how to use an app on a phone<p>India now has 850 million cellphone users. And the government is creating incentives to put one in every hand.<p>UPI now conducts more digital payments than China or USA (I've heard that it handles more than both combined, but I don't want to make that claim without a reference, and am feeling too lazy to look for one right now).
This is going to be, literally, the biggest promotion for Bitcoin ever done when people start to understand the amount of control this hides behind.<p>It is the end of privacy and the beginning of telling you literally what you will be able to do or not with your own earnings abd for how long, if they decide it is appropriate. This is more of treating people like animals than individuals IMHO.
I like CBDCs, and I’m a big privacy guy generally. I really do not see them as being significantly worse than the status quo of digital payments. For every horrifying what-if mentioned there’s already an example of it in our current system (in the US, at least). If having them means I don’t have to deal with ACH again, I’m all for it.
Yuan digital currency comes with expiry date.<p><a href="https://bfsi.economictimes.indiatimes.com/news/policy/digital-currency-yuan-comes-with-an-expiry-date-spend-or-it-will-vanish/82059471" rel="nofollow">https://bfsi.economictimes.indiatimes.com/news/policy/digita...</a>
India closely guards the rupee to prevent foreign exchange crises. A free CBDC challenges that regime because it lets anyone, anywhere, exchange rupees. So expect the sort of controls that would let New Delhi restrict that sort of activity, and then project that power domestically.
I don’t see the need for a retail CBDC in India right now. India already has a TCS (tax collected at source) for outward remittances beyond Rs 700,000 in a financial year. This is a tax that’s collected first and refunded or adjusted later. The tracking of these transactions across all authorized forex dealers is already done by the Reserve Bank of India (RBI). So a CBDC isn’t going to add value here. But I think it will be made a case since CBDC for retail is a solution searching for a problem.<p>The CBDC being a zero interest instrument, only a scare created about lots of counterfeit paper currency could increase adoption, IMO (just like a fake bogeyman about “black money” was told when declaring more than 80% of the currency as invalid in 2016. [1]<p>Cash is simple. Cash is easy. Cash doesn’t need smartphones. Did you know that less than half (or half) the population in India has a smartphone? At least one major “too big to fail” bank [2] is distributing an Android app for the CBDC on its website as an APK file. [2]<p>[1]: <a href="https://en.wikipedia.org/wiki/2016_Indian_banknote_demonetisation" rel="nofollow">https://en.wikipedia.org/wiki/2016_Indian_banknote_demonetis...</a><p>[2]: <a href="https://www.icicibank.com/personal-banking/online-services/funds-transfer/digital-rupee" rel="nofollow">https://www.icicibank.com/personal-banking/online-services/f...</a>
<a href="https://www.medianama.com/2022/11/223-petition-against-uidai-aadhaar-data-sharing-foreign-companies/" rel="nofollow">https://www.medianama.com/2022/11/223-petition-against-uidai...</a><p><i>> For 11 years now, Chaitanya has been working with retired Colonel Mathew Thomas to nullify the UIDAI’s contracts with foreign companies allowing access to Aadhaar data ... “Our major concern is: Did the citizens of India give express right to the government in the year 2010 to hand over their data to US. foreign companies? For sure, I did not give any consent,” said Chaitanya. Aadhaar data consists of citizens’ bank accounts, ration cards, addresses, mobile numbers etc.<p>> ... the High Court has advised Thomas to approach the Supreme Court again ... the Supreme Court in the Aadhaar judgment had clarified that “private entities shouldn’t have access to Aadhaar data.” The Supreme Court also said that before accessing biometric data even by the government, judicial authorisation must be a requirement.</i>
India has very successfully introduced infrastructure for mobile payments. This is one of the pieces to counter corruption and also to bring the "underground economy" into the mainstream. Digital currency is another such piece to help reduce "underhand" dealings.<p>CBDC in India will probably be used to curb hawala, black money and underground economy.
> As the popularity of physical money diminishes, however, that nexus could break down.<p>And if the "popularity" of physical money does not diminish, they will get rid of physical money. But physical money is still popular for people in many cases.<p>CBDCs need to be resisted with everything we have. They are not about convience, they are about control "on the fact that it provides another opportunity for the state to peer into private individual transactions."<p>India is hostile to crypto because its cannot be (as easily) controlled.<p>I am no fan of crypto either.
Build the following and I will use it.<p><pre><code> - value pegged to some existing currency
- unforgeable and easily verifiable, preferably offline
- non-traceable, just like coins or banknotes without a serial number
- usable offline and without third parties, just like handing over physical money</code></pre>
It's surprising to see that there are liberal proponents of this. You don't have to be a raging libertarian to see the risks of unlocking this much financial reach for governments. We (in the West) may now mostly live under reasonable governments, but there's obviously no guarantee that this won't change (including towards your <current political opponents>), and implementing social credit score systems and other dystopian things would be much easier under CBDC than it currently is?
I dont think it really matters that nobody is using them<p>The current structure of central bank networks required governments to offer an incentive for banks to join it<p>In the US thats a 6% dividend every year for the past 100 years<p>The same tactic will work again