Makes sense now. I’m fed up with shuttling to and fro the bank to exchange notes.

My sympathies. Thankfully, I was spared (well, almost) courtesy cashless payment systems. Mind you, one of the reported motives behind the Modi government’s mammoth demonetisation exercise is to encourage people to move to a cashless world.

To be frank, I don’t like plastic payments much, though.

Plastic, again, is not the future. Digital is.

You mean Bitcoin?

Well, that was just the first popular digital currency in the market. Now, there’s Ethereum, Ripple, Litecoin and Monero. But what I am suggesting is here the central bank can introduce a new digital currency for India.

An Indian Bitcoin?

Why not? The blockchain technology is getting popular among big, multinational lenders and even central banks now…

Hold, what’s a blockchain?

Simply put, it is a shared ledger driven by a set of algorithms, to make it secure and up to date. A complex system of codes allows digital currencies (cryptocurrencies) to be traded and verified electronically over a chain of computers. This process is done without a central ledger.

But I thought these were fancies of anarchic geeks and didn’t stand a chance in real world.

Not many will agree — the world’s biggest lenders, to be precise. This August, four big banks joined hands to build a new digital currency that work on blockchain. The banks believe this digital cash — Utility Settlement Coin — will be used to clear and settle financial trades over blockchain. They expect it to become an industry benchmark.

Interesting! Which are these banks?

Swiss lender UBS has pioneered the idea of this digital coin. It is joined by Deutsche Bank of Germany, Spain’s Santander and the Bank of New York Mellon. UK-based broking major ICAP also backs the venture. Now the team wants to sell their idea to central banks and is planning to launch the Utility Settlement Coin by early 2018.

Big deal, indeed!

You bet! The banks feel blockchain technology will help them exploit the power of decentralised computer networks and enhance the efficiency of financial markets. The banks mainly want to use the digital coin for trading between banks and institutions, which at the moment is a Herculean task. It is time-consuming and expensive. One estimate says for clearing and settling trades, the finance industry spends about $80 billion every year. Digital currencies help them save a lot.

Impressive. I wish our financial companies start thinking out-of-the-box like this.

Many are — not in India though. Reports suggest that many financial institutions are working on digital cash systems. A London-based group called Setl – founded by hedge fund investors and traders last year – is also working towards developing similar digital cash to settle financial market payments. Setl wants to link this cash directly to central banks. Citigroup is also developing one — Citicoin. Goldman Sachs has applied for patent for a SETLcoin, while JPMorgan is also toying with a similar idea.

So are you suggesting the RBI should think of a similar currency?

The RBI a few years ago had expressed concerns over bitcoin. But it now makes sense to create or adopt a digital currency as the country officially wants embrace a cashless future. A ‘BharatCoin’ can only help enhance finance inclusion, check duplication and black money. It will be easy to disseminate digitally and update and track. Moreover, it is in sync with the idea of Make in India and Digital India.

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