What Would the Sovereign E-Rupee Be?

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On 28 September 2017, the “full money initiative” (The “Vollgeld” referendum) was discussed in the Council of States (Upper House) of the Swiss parliament. The Council rejected the arguments. Nonetheless, the plebiscite will go ahead next year.

The full money initiative wants what the Swiss federal constitution to be upheld: "Money and monetary affairs are a matter for the federal government" (Art. 99 BV). In India this constitutional power of legal tender is with the Union under Seventh Schedule of the constitution. The initiative wants the Swiss National Bank (SNB) to adapt to the technological change that has already taken place in the world of money and, in addition to issuing the notes and coins, it should also issue all the electronic money in the country.

Electronic money currently accounts for almost 90% of the money circulating but commercial banks currently exclusively create it. Under various agreements the central banks in stages in the twentieth century agreed to recognise first bank issued notes and then electronic bank money as legal tender. The power of the banks to issue notes and coins was removed in all countries, but the power to create electronic money through loans remains.

Actually, anyone reading the papers will realise that we in the globalised capitalist world have been in the middle of a huge monetary policy experiment for years. In Switzerland there are negative interest rates, quantitative easing, problems of over-indebtedness and the growing danger of real estate bubbles and bank crises caused by the inflated money supply. In India there are very high interest rates, massive non-performing assets of the industrial sector and massive non-performing assets of the agricultural sector, and as mentioned by many, many times 57 rich people own as much wealth as the poorest 70%. Now, also, USD 70 trillion of global private bank money is trying to reinvent itself as green FDI to wipe out India’s smallholder agriculturists who constitute 70% of all Indians.

The argument is made that money issued by the Union would push out money issued by the commercial and nationalised banks that create money by lending. This is similar to the arguments made by the bankers in Switzerland. But this is exactly what the constitution requires and yet the club of bank lobbyists, politicians and central banks that are dominant. Not the least problem is that commercial banks are totally unaccountable as to whom they create money for. The health of the people, biodiversity and the climate are the sufferers.

If the public had the support of the government in the form of government support for all political parties or other financing for diverse voices and opinions the vote in the Council of States in Switzerland might have been different and who knows in India, the Jan Dhan accounts and all the citizen’s personal accounts could have been filled with e-Rupees.

The other catastrophic experiment viz. the BJP’s disastrous demonetisation experiment might also have been avoided. Only Tunisia and Senegal so far have their national currency in the form of coins, notes and e-currency all issued only by the central bank.

The team visiting Bihar to give its aye or nay to Bihar’s demand for Rs 7637 crores flood relief is yet to decide. The likely determination by the BJP will most likely be similar to what happened with the INC after the Kosi floods and Bihar will have to go to the multilateral banks, whose interest in the people of India seems these days to be more than that of the Hindu Rashtra BJP and confused capitalist INC.

Anandi Sharan was born in Switzerland, lives in Bangalore, and worked in Araria District in 2016. She mainly writes about India and how we need a better money policy to help agricultural labourers and women especially to adapt to man-made climate change. 


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