Despite COVID-19 pushing the need for digital transactions across the globe, there is still room for the ecosystem for such systems to develop further, with a need for wider acceptance of digital currencies.
This was the view of experts who deliberated at the 83rd Synergia forum organised by the Synergia Foundation. The participants felt that a majority of economies, including those of Japan, Germany or India, found comfort in cash no matter how digitised they were—and that is is extremely challenging to change this mindset. Nonetheless, banks are working in tandem towards a digitalised economy with a lot of existing cbitash expected to be digitised over time.
Though the present scenario had pushed the need for digital transactions, it may not necessarily mean a push towards a digital currency. While the COVID-19 pandemic has caused a push towards digitisation of existing currency, there has to be a clear distinction between a digital currency and digitisation—as both of them are not the same.
It was also felt that a limited amount of private money or currency will continue to exist despite any increase in digital or digitalised currency.
It was pointed out that in a country such as India, which has low financial literacy, it may be very difficult for a population of 130 crores to accept digital currency. The people of India had faith in the Reserve Bank of India (RBI) and there is this element of trust which they have in the central bank. The speakers felt that there would be practical challenges of accepting digital currency such as Bitcoins in India as the country's population will find this element of trust missing in it. It was mentioned that it will be a long time before there is universal acceptance of digital currencies as there are still issues with regard to the suitability of transactions, speculative dealings and risks associated with digital currencies.
Experts pointed out that digital currency or some form of international digital currency can help in solving currency issues in countries such as Lebanon and Venezuela whose currencies have lost value. It was stressed on the fact that there should be a proper certification mechanism for digital currencies across the globe.
The main speakers at the event included Michael Casey, advisor to Media Labs at Massachusetts Institute of Technology (MIT) and author of five books covering issues of digital culture, economics and globalisation, K.P. Krishnan, Former Secretary Economic Advisory Council to the Prime Minister of India; and B. Sriram a veteran Indian banker and current Director at ICICI Bank and formerly the Managing Director, State Bank of India