Got invited by IDFC to try out digital rupee

[JMP]

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.

RBI is not going to build end products or offer financial services, it is exploring moving only the book keeping aspect to itself. So I don't think that example is correct.
If the cost of maintaining a distributed ledger via RBI is lesser than hiring people to do book keeping, audit and repair damage from frauds. Why not?
Cost of borrowing in India is very high, anything which allows for more liquidity and transparency at a lower cost should be welcome.
We just need to be ensure adequate safeguards to prevent abuse and protect privacy are in place.

 

[booo]

everyone is forgetting that cbdc assumes that computing and electricity are always available. Also, i am reading these comments in klaus schwab's voice

 

[JMP]

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

Let's see, it did not make a much sense to me.

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.

All digital transactions can be tracked, CBDC is not special in it. And what on earth is a communist currency?

Also negative usage is possible. The positive usage is paying speed of transaction and lower transaction costs.

What is negative usage? Transactions using blockchain need not always be faster, in fact one of the biggest downsides is its slow speed. Credit card & UPI transactions run circles around Bitcoin.

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.

Vast majority of US currency is not held by individuals but organizations, they are all digital entries, so how is this any different?

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.

I don't understand why he uses fancy words for simple things. Inflation and taxes are a everyday way of capital trimming.
Again, this is possible in any digital entry and is possible even now. Every time the federal reserve decreases liquidity they are trimming capital from from the markets.

Currency Reset very much possible

This can be done in paper currency too, demonetization in India was a reset of a subset of our currency.

Because the central banks will not allow dilution of their regulatory power on the currency

This is quite well understood everywhere.

 

[t3chg33k]

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.


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.

Not sure if complicated analogies are needed.

Even on a currency note, it is the RBI governor that promises to pay you back the amount stated on the note. This is simply a digital version of it and government has nothing to with it. Any digital rupee will have to be paid back by RBI if demanded, just as they have to accept any valid currency note.

On the other hand, UPI is managed by NPCI which is a non-government company set up under the Companies Act. Any bank balance is subject to the bank's condition and insured only upto 5 lakh by DICGC. The two shouldn't be compared in the first place.

 

[blr_p]

All digital transactions can be tracked, CBDC is not special in it. And what on earth is a communist currency?

In terms of the degree of state control. I wonder if you would have mentioned it by saying 'wipe you out completely' in your previous comment, Draconian isn't it? That is what commie like means.

What is negative usage? Transactions using blockchain need not always be faster, in fact one of the biggest downsides is its slow speed. Credit card & UPI transactions run circles around Bitcoin.

devaluing. Maybe there are others too

Vast majority of US currency is not held by individuals but organizations, they are all digital entries, so how is this any different?

This is the present state of affairs. Moving to digital currency is giving the state more control over that currency. Why would they need that and under what conditions?

In the land of the free, bla bla

I don't understand why he uses fancy words for simple things. Inflation and taxes are a everyday way of capital trimming.
Again, this is possible in any digital entry and is possible even now. Every time the federal reserve decreases liquidity they are trimming capital from from the markets.

Yes, but I guess it does not reflect as directly in your account. I don't know how literally to take his comment of only 18k appeared after depositing 20k.

This can be done in paper currency too, demonetization in India was a reset of a subset of our currency.

I would call notes ban a switch as a replacement was immediately available. A reset means something more, what exactly I'm not sure but it sounds ominous. Again why do that and under what conditions?

This is quite well understood everywhere.

I did not understand that CBDC was a counter to Bitcoin until he mentioned it

Even on a currency note, it is the RBI governor that promises to pay you back the amount stated on the note. This is simply a digital version of it and government has nothing to with it. Any digital rupee will have to be paid back by RBI if demanded, just as they have to accept any valid currency note.

That I think is a misunderstanding or incomplete definition and likely deliberately so of what digital currency entails. I'm sure this is how they will choose to explain it. And say anything more is CT

 

[Soyab0007]

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.

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

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.

With CBDC, Governments will also have direct access to user's wallets, which will make it easy to collect taxes or fines — you just need to change a couple of lines of code to do this..

In the future, the bank will know almost everything about your spending model, where you live, who you work for, and which store or apps you use to buy stuff.

Banks will be aware of your financial situation and state of health. It knows what devices you use, and in some cases, even has biometric data.

 

[t3chg33k]

That I think is a misunderstanding or incomplete definition and likely deliberately so of what digital currency entails. I'm sure this is how they will choose to explain it. And say anything more is CT

The problem definitely is that banks are acting as the intermediary to maintain the wallets which will be subjected to government supervision.

Ideally, there should be RBI issued wallets that can be maintained offline by individuals if needed. Not sure if RBI is geared up to do that.

 

[Mr.J]

In the future, the bank will know almost everything about your spending model, where you live, who you work for, and which store or apps you use to buy stuff.

They already do. Pretty sure both Visa and Mastercard knows what I spend my money on.

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[6pack]

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.

If it is digital currency, why the need to make so many different denominations like physical currency? Another point, there is no Paisa denominations. If you get charged 150.50 how do you pay it? Di you lose 50paisa?

 

[vivek.krishnan]

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.

Am just wondering if the entire amount in my CBDC wallet is insured by Govt unlike the 5L limit in most banks.

Secondly, what if I have multiple wallets?

 

[t3chg33k]

Am just wondering if the entire amount in my CBDC wallet is insured by Govt unlike the 5L limit in most banks.

Secondly, what if I have multiple wallets?

As I mentioned previously, bank balance of upto 5 lakh is guaranteed by DICGC which is a division on RBI, so it is not the government that insures it. It comes under the jurisdiction of MoF though, like RBI itself. Logically, CBDC is supposed to be a payment promise from the RBI governor, as stated on bank notes.

 

[vivek.krishnan]

As I mentioned previously, bank balance of upto 5 lakh is guaranteed by DICGC which is a division on RBI, so it is not the government that insures it. It comes under the jurisdiction of MoF though, like RBI itself. Logically, CBDC is supposed to be a payment promise from the RBI governor, as stated on bank notes.

Any idea on multiple wallets? Technically, there should be only one wallet naa?

 

[t3chg33k]

Any idea on multiple wallets? Technically, there should be only one wallet naa?

RBI has a long-winded report on this but it seems they have adopted the indirect model. It implies settlement and ledger lies with the bank maintaining the wallet. The liability is supposedly with RBI, so it should be entertained by them.

 

[vivek.krishnan]

RBI has a long-winded report on this but it seems they have adopted the indirect model. It implies settlement and ledger lies with the bank maintaining the wallet. The liability is supposedly with RBI, so it should be entertained by them.

View attachment 171438

So if there is a dispute, now we will have to run after the banks and RBI. LOL.