S Ravi BSE Former Chairman On RBI CBDC: “This Is A Once In A Generation Opportunity For India To Be A World Leader”

Sethurathnam Ravi is the Founder and Managing Partner of Chartered Accountants’ firm Ravi Rajan & Co., an advisory and accountancy firm, headquartered in New Delhi, India. He is also a practicing chartered accountant and an independent director of many large public companies whose views and ideas have been instrumental in framing policy.

S Ravi expresses his views on the impact of blockchain on the world’s ecosystem, “RBI has recently launched a pilot for its digital rupee – a first step towards CBDC. However, there is a way to go before a full acceptance and leveraging of the blockchain ecosystem is achieved”, says the financial expert. According to S Ravi, this is a once-in-a-generation opportunity for India to be a world leader, and the question is whether the RBI will spur innovation or, as with fintech, wait for an inescapable inevitability while the sector lags.

As per S Ravi BSE former Chairman’s views, blockchain will change the way the world works. It has applications across the spectrum – decentralization, provenance, transparency, and security are all features key to processes across a wide array of business domains. The domain that will most emphatically impact though, is financial. “It will precipitate reimagination of money in a way as, or probably more, profound as how dematerialization did when Western Union invented wire transfers, or when credit cards changed how we pay”, S Ravi says.

The proliferation of cryptocurrency has demonstrated the ease and swiftness with which this will happen. S Ravi also adds that, however the speculative nature and closed access to mining (techies and highly resourceful entities) has created substantive – and apt – pushback. From a money perspective only, stablecoins present the most viable pathway. Yet a mix of a complete deregulation approach – way beyond the avowed aim of decentralization ‐ and an absolutist outlook of the technological innovators in the domain have caused events such as the recent collapse of an ‘algorithmic’ stablecoin causing potential doubts in the minds of the public at large.

Sethurathnam Ravi BSE former chairman discusses the core issue here being a lack of underlying security or a guarantee by way of a ‘fiat’ as present in the case of the money we use today. Arguments can range from questioning the logic behind valuing gold (which used to be the underlying security for money) to questioning the stability and/or intentions of the government that issue fiats, but the real issue is the lack of structured regulation. “Even the implementation of democratic processes – the most decentralized of all – has been fraught with inefficiencies (and worse). So to imagine that a completely free and fair system would operate decentralized currencies is a false notion no matter how deep one’s belief in it”, he says.

S Ravi highlights that it is in this scenario that the introduction of Central Bank Digital Currency or CBDC has come into focus. These instruments, ideally, bring all the benefits of blockchain and decentralization, while eliminating the risk of the absence of underlying security. According to him, a well-administered CBDC not only digitizes money with complete security and traceability but also helps eliminate black money almost entirely from the system. It can also help governments reach unbanked segments effectively with a robust self-sustaining system ‐ giving access to not just savings products, but also to credit by bringing all their transactions online, S Ravi concludes.