Got invited by IDFC to try out digital rupee

[gourav]

I just received a whatsapp message to try out eRupee (e₹) digital wallet. Apparently it's in the pilot phase and IDFC is one of the partner banks for this phase.

I had to download IDFCs e₹ app and register a digital waller. The registration process was smooth and took less than a minute. It was linked to my IDFC bank account. It verified my SIM for creating the wallet and verified my debit card for linking the bank account.

An e₹ wallet is not a bank account, it doesn't earn interest. It's like cash, so you have balance in specific denominations. I loaded ₹300 into my wallet by selecting many notes of small denominations. IDFC went ahead and issued a ₹200 note and a ₹100 note.

I'm still trying to understand what is the benefit over a simple bank account and UPI. I don't really get the concept yet. It uses blockchain apparently. But what's the benefit of e₹ for an individual? How is it different from a bank account and UPI? so many questions.

 

[booo]

wild guess time...
It is issuing its own currency which is "pegged" to INR. which the block chain world calls stable coin. just like FTX issued FTC. at some point there would be a scam where they will issue more coin than they have INR to back it up and there would be a rug pull.

On the other hand if the eRupee is issued by RBI then we are in a world where CBDC is reality.

 

[awestorr]

wild guess time...
It is issuing its own currency which is "pegged" to INR. which the block chain world calls stable coin. just like FTX issued FTC. at some point there would be a scam where they will issue more coin than they have INR to back it up and there would be a rug pull.

On the other hand if the eRupee is issued by RBI then we are in a world where CBDC is reality.

cbdc?

 

[StygianClaw]

I found this article to be quite useful for understanding eRupee.

 

[gourav]

On the other hand if the eRupee is issued by RBI then we are in a world where CBDC is reality.

It is being issued by RBI and it is CBDC. Apparently it's been in pilot mode since November last year

cbdc?

Central Bank Digital Currency

Central bank digital currency - Wikipedia

en.m.wikipedia.org

Digital rupee - Wikipedia

en.m.wikipedia.org

I found this article to be quite useful for understanding eRupee.

It's actually well written, was helpful.

 

[blr_p]

On the other hand if the eRupee is issued by RBI then we are in a world where CBDC is reality.

I maintain CBDC is more needed in the west than in India because we run a tighter ship here

Digital is more needed in western economies or any economy that is in trouble or close. Where the compulsion of govt to do away with cash and impose negative interest rates is more. Trying to put payments above 1,000 Euro in some grey zone if it's done in cash and not digital. They talk more about central bank digital currency there. CBDC is a govt counter to bitcoin.

Digital with all its intrusive controls is a commie solution to a mess created by rampant capitalism or bad fiscal management.

Where do you see rampant capitalism or bad fiscal management bankrupting things in this country? Is our public debt to GDP at some unmanageable level or likely to get there soon? What is the possibility of zero interest or negative on your bank deposits anytime soon?

Read the rest of the post

 

[booo]

I maintain CBDC is more needed in the west than in India because we run a tighter ship here

 

[blr_p]

Facts. We're the only country growing at the rate it is. India lives within its means and always has.

How is the West doing? tell me how bad it is in the US right now with your debt ceiling bollocks

Your economy is in the toilet that is why you need digital currency. Japan has had negative interest rates for some time. That is what you will be seeing in the US soon.

Digital currency, CBDC, and phasing out of high denomination paper currency are all tools to deal with a bad economy.

As far as India goes these are just trial runs, in case there is a problem in the future. Others are experimenting so no harm in trying.

But India is less likely to need such commie like tools as western countries where capitalism has run rampant.

I'm still trying to understand what is the benefit over a simple bank account and UPI. I don't really get the concept yet. It uses blockchain apparently.

Simple bank account and UPI are not digital. The digital rupee is that from the start.

So what is the point? it can only be stored in a digital format. Which means its value can be manipulated without your consent.

If you get digital rupees the govt can decide what they will be worth. Can't do that with the present setup.

If you want negative rates then digital is the way. If inflation goes out of control. You get digital Rs.20k in your account. Govet applies a negative interest and it becomes Rs.18k

If this is done to everyone then you have a powerful tool to manage inflation. Why do you need that?

For times when govt prints money beyond its means. There could be an external contingency that forces it or it could be irresponsible behaviour.

With digital you will not face hyperinflation or sudden currency value collapse but there will be a more controlled devaluation with economic stability

But what's the benefit of e₹ for an individual? How is it different from a bank account and UPI? so many questions.

No benefit for the individual. It primarily benefits the state because they have more control or let's say full control of the currency to do whatever they want.

In a way, it's similar to and as important as the introduction of fiat currency nearly a century back when the appropriate commodity backing was removed. What needs to be kept in mind is everyone had to move in that direction at some point.

So whether India stays out remains to be seen.

 

[booo]

Everyone has experience with “Mitron…”

With CBDC they wont even convince public; specific people suddenly find out their accounts become zero… India doesn’t have “checks and balances” written into constitution. Good luck with your patriotism…

 

[gourav]

tell me how bad it is in the US right now

Your economy is in the toilet that is why you need digital currency. Japan has had negative interest rates for some time

But India is less likely to need such commie like tools as western countries where capitalism has run rampant.

Which means its value can be manipulated without your consent

Govet applies a negative interest and it becomes Rs.18k

Is it possible for you to keep politics and conspiracy theories out of any discussion?

If this is done to everyone then you have a powerful tool to manage inflation

This single line is enough to show that you have absolutely zero understanding of economics and are rambling complete nonsense.

You need to raise interest rates to manage inflation. Negative interest rates are used in a deflationary economy to spur spending. Please stop writing about topics you know nothing of.

 

[ibose]

This single line is enough to show that you have absolutely zero understanding of economics and are rambling complete nonsense.

He is not entirely wrong although I don't recall if they have shown this in practice anywhere -

The Future of Inflation Part III: The Electronic Money Standard and the Possibility of a Zero Inflation Target

A world with lower inflation (and even zero inflation) and no persistent recessions may sound like a pipe dream, but we argue that it is possible by transitioning to an “electronic money standard.” Such a transition requires eliminating the zero lower bound, which central banks can achieve using...

www.imf.org

 

[gourav]

He is not entirely wrong

He is, in fact, entirely wrong. The article you linked to repeatedly talks about negative interest rates being a tool to spur economic growth in times of recession. That's the exact opposite of applying negative interest to control inflation. Which is what I said in my previous post to begin with.

 

[ibose]

He is, in fact, entirely wrong. The article you linked to repeatedly talks about negative interest rates being a tool to spur economic growth in times of recession. That's the exact opposite of applying negative interest to control inflation. Which is what I said in my previous post to begin with.

Well, I thought the line you quoted from his post was about using Digital currency to control inflation. Of course interest rate is a tool used to control inflation today and will still be needed but you are missing the main point of the article so I would suggest you to read it again.

 

[blr_p]

Is it possible for you to keep politics and conspiracy theories out of any discussion?

If you don't understand it does not mean it's CT. Second, CT can be deconstructed and we see what makes sense and what does not. Some theories termed CT do have a basis. The person I got this from was Ankit Shah who will challenge your conventional thinking at the best of times but there are instances where he makes sense.

This single line is enough to show that you have absolutely zero understanding of economics and are rambling complete nonsense.

This is called nitpicking. You find one line and use it to discredit the rest? heh, try harder. I used to get this a lot on the def board I'm on. If it's not 95% then it's fake. Considering how many voices comment on topics these days, you don't always get a slick packaged product. The truth is sometimes not very well dressed at all. Can you find it?

I started to challenge this thinking and set the bar a little lower. At 50% instead of 95%. You can get five things wrong out of ten and I'll still listen. Because of the five things you get right, no one is talking about.

Helps understand a lot of things that conventional thinking does not and cannot explain. Call this another one of my insights from discussing world affairs for over a decade.

You need to raise interest rates to manage inflation.

What if you cannot do that anymore? As in maxxed out.

Then you need other tools and currency devaluation is one. But in the present setup is not feasible.

I don't see what other purposes a digital currency offers other than giving the state absolute control over its currency. Go and challenge that.

Negative interest rates are used in a deflationary economy to spur spending. Please stop writing about topics you know nothing of.

Here, this is the lefty economist from Harvard who advocates for this nonsense. I remember reading this years ago and feeling helpless and horrified.

The Case for Implementing Effective Negative Interest Rate Policy

Lilley, Andrew, and Kenneth Rogoff. 2020. “The Case for Implementing Effective Negative Interest Rate Policy.” Strategies for Monetary Policy, (Stanford: Hoover Institution Press). Edited by John Cochrane and John Taylor April.

scholar.harvard.edu

Where is this thinking coming from? They apprehend there will come a day when the US cannot print as it has in the past and the piper will have to be paid.

What happens then? Massive deflation. Salaries halved. The services sector decimated. Ankit loves to talk about the impending doom of the services sector. Course people in the IT and other service sectors hate him for it. They want the party to go on forever. This is exactly the kind of fear-mongering I like to challenge. Except in this case, I'm coming up short.

Will this be a worldwide phenomenon? only to those economies that are inextricably linked with the US. Which is most of the West. Not India.

Big picture

 

[Mr.J]

I'm still trying to understand what is the benefit over a simple bank account and UPI. I don't really get the concept yet. It uses blockchain apparently. But what's the benefit of e₹ for an individual? How is it different from a bank account and UPI? so many questions.

Benefit for you? None. Benefit for the government? They get to ban other currencies because we have our own now.

Also why the hell it uses blockchain? Blockchains are used in a decentralized ecosystem. RBI is the central authority when it comes to Indian currency. There's no need for blockchain for any digital currency.

This is just the government jumping on the bandwagon to make it appear modern and use this opportunity to shut out other players.

 

[gourav]

Also why the hell it uses blockchain? Blockchains are used in a decentralized ecosystem.

This is the part which has always confused me ever since Bitcoin soared and blockchain became the next big thing. What's the point of using blockchain with a centralised system?

 

[blr_p]

Ankit's answer to the CBDC question

Q: What is the advantage of CBDC for the US? is it to pull back dollar circulated to cut inflation. Why can't crypto be a Global Currency?

A: The advantage of CBDC for the U.S is it's a communist currency kind of a format where you can track all the transactions. Also negative usage is possible. The positive usage is paying speed of transaction and lower transaction costs. They can manipulate a lot with the cbdc because these are electronic entries which means the valuations can fluctuate as the state would want it to be. They can also do Capital trimming because by applying negative interest rates say suppose you have twenty thousand dollars in the account they make it 18,000 with capital trimming so that is also possible with the electronic entries. So it has positive as well as negative usage.

That's pretty much it.

Q: Is it to pull back dollars circulated to cut inflation?

A: This is one usage they can do to deploy the Currency Reset very much possible.

Inflation fix

Q: Why can't crypto be a Global Currency?
A: Because the central banks will not allow dilution of their regulatory power on the currency. Morally speaking the state border stands on the currency regulation so no polity will allow a private crypto to become a Global Currency. Now as long as why can't it become otherwise? It cannot be a good store of volume because if word of mouth can change its valuation like something written on social media then that cannot be a store of value for a legal tender of money and second thing is that nobody has the jurisdiction I mean tomorrow if my screen shows 50 lesser value for my crypto e-wallet I I don't know which jurisdiction to complain at so that way also it's not possible.

CBDC should be seen as the state's counter to bitcoin

 

[JMP]

Ankit's answer

The guy believes US economy will collapse in the next 10 years. He is the Indian equivalent of Peter Zeihan -more of a therapist for those who want to believe him rather than a serious analyst.

What's the point of using blockchain with a centralised system?

Blockchain is simply a distributed ledger where data is immutable, it is just a mechanism to operate in a trustless environment. RBI does a lot of auditing, regulation apart from managing currency and this has an expense attached to it, for example CRR- Cash Reserve Ratio.

CBDC allows for -

• RBI to manage all accounting related activities themselves, with retail banks just being product vendors & service endpoints, this could reduce fraud in co-operative banks etc.
• Prevents attack vectors from hostile countries - fake currencies, money laundering etc.
• Offline transactions.

As a crude example, UPI+Bank Account is the equivalent of Nexon EV, a car designed for ICE but modified to be an EV. CBDC would be Ioniq 5, a car designed ground up to be an EV . There are no shackles like payment gateways, settlements etc. hence the cost of operations decreases.

That being said, it comes with strings attached - privacy is all but lost and the state gets the capacity to wipe you out completely should they wish / chose to do so.

 

[blr_p]

The guy believes US economy will collapse in the next 10 years. He is the Indian equivalent of Peter Zeihan -more of a therapist for those who want to believe him rather than a serious analyst.

The talk circuit was brimming with US collapse types coming up to the '08 GFC crisis. Keep saying it often enough and when it does rake in the creds.

Remember Peter Schiff ?

He has some crazy predictions but I'm willing to hear him out. This fellow is ambitious. He wants to come up with a Sanatan economics alternative to Adam Smith & Karl Marx. Those are some pretty lofty goals

He dabbles in geopolitics too. Tempted to pick up his book which is why he's been so active recently.

Can you see anything wrong in his explanation of the topic? I've never heard anyone explain it quite as concisely as he has.

 

[Mr.J]

CBDC allows for -

• RBI to manage all accounting related activities themselves, with retail banks just being product vendors & service endpoints, this could reduce fraud in co-operative banks etc.

But why is this desirable in the first place? The job of the Reserve Bank is managing currency and monetary policy. This is like asking FSSAI to make biscuits and potato chips.