Hyderabad, July 16: This edited book titled “An Approach Towards Central Bank Digital Currency” consists of 22 contributory articles with 3 commentaries from India and abroad. The book covers wide range of studies on monetary economics allied to central bank digital currency. Therefore, It has divided into three sections. In the first section titled Monetary Economics and Central Bank Digital Currency, eight papers were included where A critique of Keynesian monetary theory, the concept of Bancor in the digital form, transfinancial economics, natural economic theory of exchange, the sociological monetary theory in post-modern mind, the echo-system of central bank digital currency, the electronic transformation of money are of special importance for future economic theory which were elaborated exclusively.
In section two, the concept of Central Bank Digital Currency: Theory, Design, Policy And Implications was developed where 11 papers have been included. In this section, the concept of CBDC, its advantages, framework, possible designs, technological possibilities, scope of Fintech, payments system, monetary policy facilities, feasibilities and constraints have been developed extensively.
In section three, the theme title is concentrated on Cryptocurrency: Nature, trade and implications where there are 3 papers which described the role of cryptocurrencies in money and finance, international capital mobility and the feasibility of introducing cryptocurrency trading in Bangladesh were brilliantly exercised here by the academicians of India, Bangladesh. In section 4,three commentaries were included.
A BRIEF NOTE: SECTION-1
Dr.Dante A. Urbina (Peru) critically analyzed the orthodox IS-LM model of Keynes and showed shortcomings and limitations through the references from the model of Romer (2000) on “Keynesian macroeconomics without the LM curve” and Palley’s model (2008) on “the macroeconomic significance of the loan market and bank behavior” taking into account of “an endogenous money supply that is driven by bank lending” and Keen’s (2013) monetary model from Minsky‘s perspective which has a good fit in the pre and post-crisis periods, O‘Donnell and Rogers (2015) IY-LM model as a General Theory-compatible replacement for IS-LM, and the Aggregate demand – price adjustment (AD-PA) or Aggregate demand – inflation adjustment (AD-IA) model of Weerapana (2003) respectively. He illustrated Heim (2017) model which had performed with the Fisher´s income equation of exchange and without using the IS-LM model.
Dr. Gonzalo Perez-Seoane Mazzuchelli (Spain) advocates that according to Natural Economic Theory, cryptocurrencies are quasi-assets of very high risk and CBDCs and stablecoins do not seem to be competition for cryptocurrencies, since the interests and concerns of the target audience of each submarket are different. Fishers purchasing power can transformed into natural equation of exchange where the role of quantity theory in different standard is nothing but supplying high powered money and creating inflation where decentralized cryptocurrencies will still produce hyper-inflation. Even Gresham’s law will be ineffective here. In natural theory, Keynes’s decision on spending to be temporarily the variable and if the purchasing power is increased, the debt capacity will increase and vice versa. Cryptocurrencies will cause there to be a greater and unpredictable purchasing power in the economy than the value of production. The adjustment between both variables will be via the price level. The serious anomaly born of cryptocurrency will cause the functioning of the economy, permanently, to adjust to Keynes’s decision on spending. He believes that the international monetary system based on fiat money and the dollar as “word reserve currency” will have to be completely revised to reverse the situation. A new monetary system will be born. He summarised that the quantity theory of money, not being effective in the current fiat monetary system, will be true when the cryptocurrency market: i) reaches a striking purchasing power in relation to fiat money and the level of world production, ii) provided that a conspicuous part of the purchasing power of cryptocurrencies is used for the acquisition of goods and services. In such a scenario, the consequences of cryptocurrencies could be immense.
Dr.Kaushik Chattopadhyay tried to explain that Is there any change in the position of money in the society? What exactly are the effects of this change in social mind? Are the intrinsic value of money and the value we see as its symbol also changing? As an objectified social relation of production, how is money now filling our life conditions with uncertainty? He seeks to shed light on those issues. The main goal of his article is to understand the social mind of money, the philosophy of money, and its sociological critique. Author felt that the modern mind has adopted money as an indicator of individual freedom and is completely invisible in the case of digital currency of the postmodern cultural phenomenon. The postmodern mind socially recognizes the essence of money as a flow. Currency clarified its position as a social fact in the modernity. The essence of digital currency in postmodern mind is refractory to the individual’s quest for self-awareness. Digital payments easily present readymade knowledge to a person. The postmodern mind is of a simple nature in its instant transaction character. Since digital transactions point to a simpler motor-habit stage, the perfection of personality development is not required here. So today in order to acquire the power of money, a person gives up his personality.
Robert M. Searle (UK)briefly presented Transfinancial Economics (TFE) which is viewed as a form of Neo-Classical Keynesian Economics. TFE has evolved due to huge relevance of the use of computers and information technology in finance which is influencing the economy towards a more ethical, and greener environment friendly economy as never before. It is not fair to treat TFE equally with Modern Monetary Theory which is more advanced but there are many basic differences between the two. TFE would able to maintain the value of money in real-time at the point of sale (POS). Fintech is a critical part of the TFE paradigm. TFE is fully environment friendly.
Dr Debesh Bhowmik has attempted to formulate a model of digital international currency within the framework of mCBDC Bridge concept for international payment among the countries following modified Keynes (1942) plan on Bancor .The model follows the cryptographic point -to-point topology in DLT and blockchain methodology. To counteract financial stability, the model assumed eBancor as the international digital currency which is legal, medium of exchange, a store value and has a unit of account. In Both wholesale and in retail cross border payment, the design of eBancor can be applied through a FinTech wallet provider. The eBancor can be performed in three tier framework process where in tier 1, the bloc ecurrencies have been formed, in tier2, the continental ecurrencies have been designed and in tier 3, eBancor is finally formed. The process is required for fulfilment of OCA criteria in the digital currency areas. The unit of account is treated as 1eBancor=0.001gms of gold(pure) where the calculation of SDR valuation is applied using the methodology of Polak (1974;1979). The successful launch of eBancor is a long run phenomenon due to having many limitations as of now. However, it can produce stable international monetary system in a digital form.
Dr. Alexander Samarin (Switzerland) described human value centric digital transformation of money showing basic character of money in financial system, in banking, and he has given basic digital coin design in payment system of local currency unit either in RTGS, NEFT or CBDC in retail transaction. He has designed the architecture and explained the digitalisation of Hardware Security Module and Decentralised Asset Exchange, retail and wholesale payment with local currency unit and cross border payment, the architect of Digital Financial Market Infrastructure and how it is operative in retail and wholesale payments including choice of selection of Separation of the DFMI functions in several countries. The author proposed clear policies of commercial and central banks in the circulation of cryptocurrencies, CBDC and fiat currency showing their stability and future with a group of monetary policies.
Dr. Sandeep Poddar (Malaysia) correlates cashless society and sustainable green environment. Author assumes that the introduction of environmentally friendly, long-term cashless money will, of course,e in high demand in the future. By eliminating plastic waste and forest destruction, digital money will help to save the environment.
Author thinks that the contactless transduction modes although supports the environment by not using trees and cause of plastic dumping directly but high energy consumption and computer wastes lead to environmental pollution issues supports UNSDG :13 Climate Change. However, in order to achieve a sustainable green environment for human society, we must keep e-waste under control. The future digital cashless economy in our human society is the new inevitable evolution and in this process many adaptations need to be employed.
Dr.Santos Flores-Eslava and Ricardo Almeraya-Herrera (Mexico) thinks that Cybercrime causes severe harm and poses a real threat to people all over the world, and unlike traditional crime that is committed in one geographic location, cybercrime is committed online and is often not linked to any geographic location. Authors argued that companies and institutions would benefit by establishing Risk Management Units that would adopt the fundamental methodologies for calculating operational risk capital requirements established under the Basel III framework and described the Basic Indicator Approach, the Standardized Approach, Advanced Measurement Approaches (AMA), the Loss Distribution Approach (LDA), and Scenario Analysis which can be implemented by an institution when calculating risk measures for CBDC cyber risk. When cyber risk data is scarce, the scenario analysis approach may be helpful to estimate operational risk capital requirements for this type of risk.
SECTION-2
Dr Suvranshu Pan discussed the importance and implications of introduction of CBDC highlighting the Background, Barter to CBDC, Feasibility, Path to Mass Adoption, Infrastructure, technological risks, designs and monetary policy, implications in India, Key principles in India and noting significant opportunities in transactions in concluding remarks.
Mr. Vipin Malik, Dr. Asim K. Karmakar and Mr. Sankhanath Bandyopadhyay defined CBDC and its causes of introduction, studied issues of CBDC in some countries, assessed history of cryptocurrencies and its possible regulations in a few countries. The paper discussed various aspects of its design issues, illustrated with certain case studies like e-krona of Sweden along with financial inclusion aspect of CBDC. The paper distinguished between CBDC and privately held uncontrolled digital currencies.
Dr Aruni Kumar tried to explain the consequences of introduction of CBDC in India with the limited attainment of electronic payment mechanism, low degree of financial inclusion in banking and expected feasibility report of financial stability of CBDC in India given the minimum expertise and technology. After reviewing theoretical discussions, author remarked that monetary policy of CBDC in India is still now unknown and on the stages of experiment and said that though the change is inevitable and CBDC is going to be next money, Central Banks needs to advance in this field with cautious approach.
Dr. Niharika Srivastava has illustrated the advantages of digital money like cryptocurrencies and described the facilities of on-going mechanisms of e-payments like net banking, mobile banking, use of credit and debit cards, E-Wallets, RTGS, ATM and so on. Author described that it is revolutionary in the monetary economics in settling transactions through cryptocurrencies and gave ideas on Institutional Cryptocurrency Holder, Basic Cryptocurrency Holder, Preferable Cryptocurrency Holder, Equity Cryptocurrency Holder and their organisational form.
Dr Karlapudi Ramesh Babu gives a brief historical account of CBDC research and development, from predecessors of modern digital currencies to the work of central banks in the past decade. Author discusses the framework of central bank digital currency where offline and online payment, security, resilience, availability, scalability have been also analysed. Moreover, author discusses functionalities of central bank digital currency designs and its choices towards desired goals. He concluded that a CBDC must be convertible, convenient, accessible, and low cost. The underlying system should be resilient, available 24/7, flexible, interoperable, private and secure for the general public. At the same time, the payment system upon which a CBDC exists and is transferred must involve the private sector to benefit from innovation and competition and support adoption and use.
Dr Pratima Ghosh evaluated the feasibility of CBDC in India and also reviewed the concepts of implementation of CBDC and remarked that Indian financial system is suitable to start CBDC which is required proper infrastructure and regulatory framework with appropriate design.
Dr. Narasingha Das and Dr Labani Dey assessed the establishment of CBDC for better monetary policy, improving the efficiency of digital payment and emphasising its merits and suggested for ideal CBDC design which will fulfil competing priorities, financial stability, central bank led design where possibility of resign to satisfy changing central bank’s objectives in due course must be an added feature.
Dr. Debjani Mitra highlighted on implementation and impact of CBDC in China and few lessons for India. She hoped that it would help the Yuan internalisation against US Dollar and Euro even though it will boost the project Belt and Route Initiative.Author opined that the digital yuan could prove to be China’s most effective and noteworthy attack on U.S. hegemony.
Dr. Prabina Kumar Padhi attempted to analyze in detail on CBDC, discusses the stand of different countries over the regulation and acceptance of digital currencies. Furthermore, his paper is an attempt to provide overall concept regarding idea on developments of Central Bank digital currency consideration and Challenges associated with Indian context specially in social benefit programme, Cross-Border Remittances, Retail payments, MSME lending and so on.
Dr. Budhen Kumar Saikia discussed the features, characteristics, merits and demerits of CBDC, and clarified the impact of CBDC in India and also indicated some statistical information about cryptocurrencies in the world market.
Dr. Vinay Kandpal, Dr Amit Malhotra, Dr Menakshi Sharma and Dr Anjim Sabiha tried to explore the need for reducing the reliance on cash for the day-to-day transactions, prospects and the challenges associated with initiatives adopted for India’s drive in the direction
of a Cashless economy.Authors showed the consecutive steps for electronic payment system in India and their advantages in financial markets where technological innovations and research played a significant role although the authors emphasised the cyber crimes
and attacks during the transactions processes where regulations should be the primary concern of the respective government. The authors found the rosy prospect of the India’s journey towards cashless economy evaluating the government of India’s steps of measures for digital transactions in home and abroad.
SECTION-3
Using 150 samples and analyzing 17 variables, Dr. Brinda Kalyani P R and Dr. Ashok Kumar Patnaik found that cryptocurrency’s acceptability can be attributed to factors of Lack of Control, Reliability, Complexity, and Understandability. Cryptocurrency as an enabler for International Capital Mobility is a novel idea if the one used is able to gain a Universal Acceptance in different platforms. With the advent of Technology and the Cryptocurrency Familiarity the study foresees a wider acceptance of Cryptocurrency in the International Capital Mobility.
Fahad Zeya and Dr. Shapan Chandra Majumder(Bangladesh) studied the Perception on cryptocurrency trade in Bangladesh investigating a survey on 155 persons using variables as perceived case of use, intention to use cryptocurrency, perceived usefulness, trust and perceived risk etc. and found a significant impact of trust and usefulness, perceived use and perceived risk have insignificant impact on intention to use cryptocurrency. The authors recommended to consider government to use cryptocurrency with proper regulations.
Mr. Rohit Gupta and Dr.Pavnesh Kumar emphasised on the rise of cryptocurrencies in business all over the world adding history of cryptocurrencies and its blockchain mechanism and tried to show the future of digital currency in India with the help of previous study reports, Analysis of Different Agencies Data & In-Depth Interviews of Some Experts. The author exclusively explained the History of cryptocurrency in India, its strength, weakness, opportunities, threats and so on.
Section-4
In this section, there are three commentary written by Dr.Manoj Kumar Mishra and Dr.Debesh Bhowmik, Dr B Suresh Lal and last one is written by Dr.Badri Narayanan Gopal Krishan of Niti Aayog.
The excellent foreword was written by Dr. Evan Lau Poh Hock,Associate Professor of University of Malaysia Sarawak and by Dr. Amiya Bhaumik, Professor of Lincoln University College, Malaysia.
The book was neatly published by Kunal Books, New Delhi. Its price is Rs.1495/- or $60.The book will surely helpful to scholars, teachers, professionals and general readers who are interested in CBDC.
