The Digital Rupee Is Backed By A Biometric Infrastructure System
February 25, 2023—Indian Prime Minister Narendra Modi encouraged G20 delegates meeting in Bengaluru yesterday to follow India’s lead in adopting a digital currency model.
The digital rupee, as it’s known, is run by blockchain and other technologies and is an alternative to cryptocurrency and cash. India’s central bank announced its launch in February 2022. By November, it issued its first pilot and began promoting the digital rupee’s adoption early this year.
This week, India’s leaders took that launch one step further: They began pushing the digital rupee abroad as they hosted the G20.
“Over the past few years, we have created a highly secure, highly trusted, and highly efficient public digital infrastructure,” said Modi. “Our digital payments eco-system has been developed as a free public good.”
Addressing G20 finance delegates meeting in Bengaluru, formerly known as Bangalore, Modi encouraged guests to try the digital payments platform, referred to as UPI.
“As you make use of it and experience its ease of use, you will understand why Indian consumers have adopted it so willingly,” he said, encouraging finance heads to use the Indian UPI as a template for replication.
India’s Digital ‘Stack’ System
While many countries are creating digital currencies, India’s digital rupee is underpinned by an extensive, high-technology infrastructure system called the “India Stack.”
In 2021, the IMF predicted the India Stack would “revolutionize” finance. It’s been in the works in India for over a decade, beginning with a biometric digital ID system. According to the IMF, “the government initiated a campaign encouraging people to have their photograph, fingerprints, and other biometric details taken at enrollment centers across the country.”
What’s astonishing is that nearly 1.2 billion people agreed to give their biometric information in exchange for a unique 12-digit identification number to access a range of services. Now, India is promoting the digital rupee and the India Stack as means to promote financial inclusion, and there’s no telling where this technology will go.
On Global Exchange
India is marketing the digital rupee abroad, both as a means to facilitate cross-border transactions and to license the technology for domestic use in other countries, the Financial Times reported. It is part of a soft-power strategy by Modi.
The country is also promoting the rupee as a currency of global exchange. Its central bank has so far approved rupee accounts for six to seven countries, the Financial Times reported in January.
G20 Toward Digital Ecosystem
The idea of digital currency is developing rapidly, with international organizations like the IMF and the Bank of International Settlements promoting its technology. As for the G20 delegates, they are coordinating plans. The leaders’ statement does not mention India’s technology, but it says the following:
“By our third meeting in 2023, we look forward to the formulation of policy recommendations for rapidly advancing financial inclusion and productivity gains through a well-designed digital financial ecosystem by leveraging DPI.”
No Mention Of Russia Or Ukraine
Meanwhile, Modi did not address the Russia-Ukraine war. Instead, he referred only to “rising geo-political tensions in different parts of the world” and “disruptions in global supply chains.” However, the official G20 statement issued today noted the divide about the war.
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