Digital transactions in India are seeing unprecedented growth and indeed for a large chunk of the population, rupee has become digitised. In this context, RBI’s Central Bank Digital Currency (CBDC) becomes nuanced for really appreciating its usefulness. One advantage of digital currency could be segregation of spending from savings. CBDC is likely to act as only a spending instrument, and become the catalyst for efficiency enhancement of the informal sector.
Presently, ₹ is both an instrument of savings as well as for spending, and the dual role makes the availability of banking services vital for efficient business operations. Present digital transactions are facilitated by commercial and other banking service providers. This leaves unbanked or difficult banking experiencers like those dwelling in slums and remote villages vulnerable to the VUCA world.
One of the unfortunate realities of rapid pace of urbanisation is slum dwelling in Cities. People migrating from rural settlements to more informal settlements in and around the city in bids to find work are subjected to a highly volatile business environment. Even if there is no wage or price earning opportunity, informal sector workers still have the goods and services to offer to each other, but nobody has money to pay for them. With no buffer and no surplus money to inject into the informal sector, availability of wage earning tasks in season and thereafter no source of income creates huge uncertainty. This is where a coupon-like setup provided by CBDC can save the day. One underlying case study can be the use of Bangla Pesa in Kenyan slums.
As Bangla Pesa is entering the 10th year of its existence, it has become a role model for poverty alleviation. Mombasa has more than 60k Bangladeshi slum dwellers who have used a complimentary voucher system by the name of Bangla Pesa which uses M-Pesa APP to transact in this alternative currency. Slum dwellers had goods and services but no money at all, thereby wasting time and rotting goods. Bangla Pesa came into being as a real measure of value of goods and services allowing a barter system to evolve instead of wasted opportunities. Users say that, “You can’t steal Bangla Pesa and it has no corruption. You take money to get rich but not to eradicate poverty. Use of Bangla Pesa indicates somebody who doesn’t have money is going to get help.”
Use cases of CBDC can be built around the experiences of Bangla Pesa. Not to mention that RBI taking direct liability and making this token based, solves a major issue of cryptocurrencies i.e. Transactional Privacy. DBT transactions can become more efficient and effective using such CBDC and not to forget the benefits manifesting to a local villager who will no longer need to travel distances to receive cash from the bank and also pay high percentages as remittances charges.
SHARE
