I have been reading the news items on the volume of counterfeit notes surfacing in India. It looks like more than half a billion dollars worth of fake rupees are circulating around the country. The banking industry must be quaking in their boots on the volume of menace they carry. It is distressing to note the thumb sucking responses and comments - terror trail, economic terrrorism, police cases.....
What is the most telling response to fake notes? Electronic money. Central Banks and regulators will be better off devoting their energies to promoting Electronic money (debit cards, credit cards, mobile payments, ACH, etc) rather than investing in technology to make currency notes more 'secure'. Till date, I don't think any country has managed to come up with a fool-proof currency note that can't be replicated.
But how does one bite the bullet here? While digital money is growing, it is still nowhere close to consumer spending on cash. In India, a considerable amount of spend occurs in cash to stay outside the tax net.
If you ask me, at least one country should take the lead and simply stop printing currency notes for mass circulation. Invest that money to strengthen the electronic payments network. Shock treatment may work well where medication hasn't so far! It may sound quite a drastic step; but may be the only way to get people to using electronic currencies.
It only takes one bold move to complete the revolution.
Thursday, August 28, 2008
Monday, August 18, 2008
Dumb & Dumber
I notice a lot of attention in the blogosphere to this article on how the Internet (Google in particular) is turning humanity into a mass of 'thoughtless' nerds with a poor attention span and limited ability to assimiliate useful knowledge. You can read the article here -http://www.theatlantic.com/doc/200807/google
The author's (Nicholas Carr) thoughts set me thinking on a few fronts. Aren't we all turning into 'comfortable automatons' secure in our digital world that seems so easy - mobile, internet, GPRS, Google search...? Everything seems to be within reach and just a click or a few tabs away. This kind of echoes what my father used to rant in my school going days - "using the calculator will turn your arithmetical abilities to dust". The question is whether we will be happier with our manual devices and reliance on our brains and wits to go through our daily lives. The current argument by Carr remind me of an essay by Isaac Asimov in the early eighties where he argued against notion of societies living in 'backwater' scenarios and away from the urban jungles. Asimov said that modern human simply cannot go back to the woods. Taking the same thought process, can humanity today move in any direction except forward in the digital 'evolution'.
Much is being made of the arrival of 'semantic' web that will enable users to intelligently interact with the web to a level of personalization never seen before. Carr's fears of human intelligence being replaced by AI would be magnified to a much greater degree in Web 2.0.
The moot point is - whether our over dependence on the Web to govern our lives is turning us to digital zombies? Are our lives flitting like a fly from one crumb to the other?
Certainly an interesting topic of debate that promises to enhance the much vaunted 'digital divide' of our world!
The author's (Nicholas Carr) thoughts set me thinking on a few fronts. Aren't we all turning into 'comfortable automatons' secure in our digital world that seems so easy - mobile, internet, GPRS, Google search...? Everything seems to be within reach and just a click or a few tabs away. This kind of echoes what my father used to rant in my school going days - "using the calculator will turn your arithmetical abilities to dust". The question is whether we will be happier with our manual devices and reliance on our brains and wits to go through our daily lives. The current argument by Carr remind me of an essay by Isaac Asimov in the early eighties where he argued against notion of societies living in 'backwater' scenarios and away from the urban jungles. Asimov said that modern human simply cannot go back to the woods. Taking the same thought process, can humanity today move in any direction except forward in the digital 'evolution'.
Much is being made of the arrival of 'semantic' web that will enable users to intelligently interact with the web to a level of personalization never seen before. Carr's fears of human intelligence being replaced by AI would be magnified to a much greater degree in Web 2.0.
The moot point is - whether our over dependence on the Web to govern our lives is turning us to digital zombies? Are our lives flitting like a fly from one crumb to the other?
Certainly an interesting topic of debate that promises to enhance the much vaunted 'digital divide' of our world!
Mobile Food stamps
Mobile Food Stamps
09/07/2008 14:23:57
With the global food crisis raging on, it is time for countries and international organisations to think of creative ways to address the issue. Giving free rations is not a viable economic answer. Consumers reeling from price hikes don't need food aid; they need assistance on the pricing.
One of the common solutions to address food inflation is issuing food stamps. Some countries like India issue 'ration cards' that entitle holders to purchase food items at low rates from designated shops.
In today's 'Goog-Mobile' world, I think it is time for countries to use the ubiquitous mobile phone as a channel for distributing food stamps. Governments can tie up with mobile operators and aid agencies to send 'food credits' to citizens mobile numbers. I had pleaded in one of my earlier blogs that it is time for the mobile phone to be used as a citizen ID. The added benefit of your mobile carrying 'food currency' makes it all the more attractive. Already, in countries like Kenya, the mobile credits are used as a P2P currency unit. So, why not download food stamps to mobile phones of needy citizens. The needy consumers will just need to go to designated shops, pay by mobile phone and collect their food items. Mobile phones and numbers are perhaps the fastest growing consumer item across the world - particularly in the Third World. Governments should come out the traditional mode of thinking and look for digital solutions. In fact, donors from across the world can actually donate mobile credits by uploading contributions to mobile numbers at the MSP's website!
The road to digital currency can begin at the most basic necessity - FOOD!
09/07/2008 14:23:57
With the global food crisis raging on, it is time for countries and international organisations to think of creative ways to address the issue. Giving free rations is not a viable economic answer. Consumers reeling from price hikes don't need food aid; they need assistance on the pricing.
One of the common solutions to address food inflation is issuing food stamps. Some countries like India issue 'ration cards' that entitle holders to purchase food items at low rates from designated shops.
In today's 'Goog-Mobile' world, I think it is time for countries to use the ubiquitous mobile phone as a channel for distributing food stamps. Governments can tie up with mobile operators and aid agencies to send 'food credits' to citizens mobile numbers. I had pleaded in one of my earlier blogs that it is time for the mobile phone to be used as a citizen ID. The added benefit of your mobile carrying 'food currency' makes it all the more attractive. Already, in countries like Kenya, the mobile credits are used as a P2P currency unit. So, why not download food stamps to mobile phones of needy citizens. The needy consumers will just need to go to designated shops, pay by mobile phone and collect their food items. Mobile phones and numbers are perhaps the fastest growing consumer item across the world - particularly in the Third World. Governments should come out the traditional mode of thinking and look for digital solutions. In fact, donors from across the world can actually donate mobile credits by uploading contributions to mobile numbers at the MSP's website!
The road to digital currency can begin at the most basic necessity - FOOD!
Money Laundering through Digital Currencies
I was reading this new report by US DOJ on how digital currencies are increasingly popular with money launderers(or is it laundries?) - http://www.usdoj.gov/ndic/pubs28/28675/index.htm
The DOJ notes that digital currencies 'combine the intrinsic value of gold and other precious metals as well as the designated value of national currencies with the worldwide reach of the Internet to create an ideal mechanism for international money laundering'.
To me this statement clearly declares that digital currencies are the best thing that have happened for the criminal fraternity. They no longer have to rely on cumbersome processes of transferring money through mules and have people open bank accounts to wash dirty currency. As ever, the shadowy world is the first mover and adopted innovations to benefit from the digital revolution; leaving the legitimate world to debate on regulations and consumer security!
The report defines digital currencies as 'privately owned online payment systems that allow international payments, which are often denominated in standard weights for gold and precious metals.' This really seems to suggest that the criminal world can literally start and operate a 'parallel' digital currency system with full settlement and transfer mechanism. Who knows, perhaps there is one already operating! All that needs to be done is to 'digitise' systems like 'Hawala' and other money transfer mechanisms tailoring them to the online world and lay down the rules for settlement and exchange.
I am sure sooner or later we will stumble upon a seamlessly operating 'underworld digital currency' on a global scale while the legitimate financial world will continue to debate and get only their feet wet in the deep waters of digital currencies.
The DOJ notes that digital currencies 'combine the intrinsic value of gold and other precious metals as well as the designated value of national currencies with the worldwide reach of the Internet to create an ideal mechanism for international money laundering'.
To me this statement clearly declares that digital currencies are the best thing that have happened for the criminal fraternity. They no longer have to rely on cumbersome processes of transferring money through mules and have people open bank accounts to wash dirty currency. As ever, the shadowy world is the first mover and adopted innovations to benefit from the digital revolution; leaving the legitimate world to debate on regulations and consumer security!
The report defines digital currencies as 'privately owned online payment systems that allow international payments, which are often denominated in standard weights for gold and precious metals.' This really seems to suggest that the criminal world can literally start and operate a 'parallel' digital currency system with full settlement and transfer mechanism. Who knows, perhaps there is one already operating! All that needs to be done is to 'digitise' systems like 'Hawala' and other money transfer mechanisms tailoring them to the online world and lay down the rules for settlement and exchange.
I am sure sooner or later we will stumble upon a seamlessly operating 'underworld digital currency' on a global scale while the legitimate financial world will continue to debate and get only their feet wet in the deep waters of digital currencies.
Buddy - can you spare me a Billion?
It is amusing to see how the banking industry is snorting in relief that Citi Bank declared a 2Q 08 loss of 'only' $ 2.5 Billion. Things have come to such a pass that a bank like IndyMac going under has only elicited marginal interest. Just as social scientists declare '40 is the new 30', the banking gurus seem to say 'Billion is the new million'! UBS, Bear Stearns, Lehman ..... these giants have got the whole world talking like investment bankers - in billions.
Apart from a few merchants of doom, everyone seems to be wishing away the crisis by harping on 'we reaching the end of the curve'. The number of big wigs trawling around the globe for additional capital would certainly give the airlines some cause for cheer. The 'capital lounges' in the GCC countries' SWFs resemble a doctor's waiting room.
It now looks like our sensitivities have been so numbed by the billions of dollars flowing down the gutters that we look to becoming oblivious to the potential failures of an important part of the financial industry - small and medium banks. Poor Bradford and Bingley only got a passing show of interest in their rights issue caper. What happens to the average man on the street when your neighbourhood banks start folding up? Are we now in a world where we prescribe 'Capitalism for the poor and Socialism for the rich'? Clearly, the banking industry appears to moving its value system at a pace beyond our understanding.
Perhaps, the next stage is where we react only to figures in Trillions. We seem to have made a start last week in the news item of Citibank's $ 1.6 trillion off balance sheet holdings. Small fry like me who still count in thousands aren't likely to attract any attention!
Apart from a few merchants of doom, everyone seems to be wishing away the crisis by harping on 'we reaching the end of the curve'. The number of big wigs trawling around the globe for additional capital would certainly give the airlines some cause for cheer. The 'capital lounges' in the GCC countries' SWFs resemble a doctor's waiting room.
It now looks like our sensitivities have been so numbed by the billions of dollars flowing down the gutters that we look to becoming oblivious to the potential failures of an important part of the financial industry - small and medium banks. Poor Bradford and Bingley only got a passing show of interest in their rights issue caper. What happens to the average man on the street when your neighbourhood banks start folding up? Are we now in a world where we prescribe 'Capitalism for the poor and Socialism for the rich'? Clearly, the banking industry appears to moving its value system at a pace beyond our understanding.
Perhaps, the next stage is where we react only to figures in Trillions. We seem to have made a start last week in the news item of Citibank's $ 1.6 trillion off balance sheet holdings. Small fry like me who still count in thousands aren't likely to attract any attention!
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