Could India’s blockchain technology help the transition to a cashless society?
The Indian government has already taken steps in this direction and has since published controversial plans to distance itself from physical money. A group of scientists, supported by the Central Bank, now called for an investigation into the blockchain. It is supposed to help achieve this goal.
According to the IDRBT, the blockchain could help achieve these goals
The full report presents the results of the central banks of Canada and the United Kingdom, as well as others. The authors of the paper wrote: “From a technical point of view, we see that it [the blockchain] is mature enough and there is the necessary attention among stakeholders, so this is the right time to take the necessary steps to digitise the Indian rupee [with the help of the blockchain].
The Indian government, led by Minister Narendra Modi, came under heavy criticism in early November after ordering banknotes with higher values to be declared illegal. Modi later went further, calling on India at the end of the month to adjust to digital money. Meanwhile, the government began to level the legislation for the next steps.
Drawing up a roadmap
The authors also pointed out that Indian banks also have other ways to explore the technology.
At the beginning, it is recommended that banks improve their internals with blockchain networks. On the one hand as a means of training and on the other hand to see how technology can help their own institution.
“Banks could use a private blockchain for internal purposes,” the authors wrote. “This could not only be seen as training for internal staff, it would also bring advantages in efficient assent management [and] cross-selling.
The Institute for Development and Research in Banking Technology (IDRBT) was founded in the 1990s by the Reserve Bank of India (RBI). Last week, the Institute published its first major white paper on blockchain technology (including a study on trade finance applications).
The paper first provides a broad overview of the mechanics of the technology and what possible applications for the Indian banking sector look like. The white paper notes that the time is ripe to explore how the rupee can be digitized using distributed ledger technology.
The IDRBT went on to point out that banks can work cooperatively in the areas of anti-money laundering/know-your-customer, credit syndication and trade finance.
“Other areas where blockchain technology could be beneficial in the BFSI (banking, financial services and insurance) sector are supply chain finance, bill discounting, cooperative account management, securities offering and asset management mandates,” the authors added.