The history of India’s paper currency would date back to 19th century. It was on 1861 when British India government introduced the first paper currency. Until the date, there is no change in the way they are being used in our economy. Rolling back to a little history of Indian currency, the first denomination that came into existence was Rs.10, which later was followed by 5 rupee note on 1872. The problem was that economy wasn’t wider enough as of now to accommodate such high currencies such that 10 rupees would only stay in the pocket of rich, then. Today things are far from 1900’s, even the highest denomination might need in hundreds to live a comfortable life.
Thanks to the black money and corruption, the economy was suffocating with instability and bedlam. From the perspective of a financial connoisseur paper currencies have both advantages as well disadvantage, but weighing with future on other plate, actually it’s time for us to skip the physical currency and move to a digital economy. Yes, it’s certain that they are apparent and doesn’t make you feel the possession, but atleast they are safe inside some computer and stored as mere numbers. Nobody can steal what isn’t there.
According to a survey from the United States, in the next 30 years economy might hinge on a plastic card or maybe even something smaller and simpler than that. Nowadays NFC payments using smartphones are getting popular, who couldn’t foresee the chance for money being mobilized? Let us see why one should prefer digital payments and e-currencies other than paper counterparts:
- Global acceptance: Unlike paper currency, the e-currencies have global acceptance and in fact, they might be considered as a unit. Say you have 66 rupees in your account, while you are in the US it means you have 1 dollar in the possession (as of 2016 exchange rates)and all it took was some algorithms and online programs to simply convert them. Whereas paper currencies should be taken to nearest embassy to exchange them for local currencies.
- No worry about counterfeits: Since the e-money has no physical existence, there shouldn’t be any worry that they are faked and circulated. Moreover, all sorts of money transactions are monitored and any suspicious flow shall be held for an inquiry as well.
- Printing costs back to the economy: Do you know that printing costs of paper money would take 1 ~ 4% of the total worth? Yes, it’s a fact. Paper currency means some trees have to be sacrificed for our economy management, in the aftermath they have to be discarded too. Moving to digital currencies means all these costs would lie on the economy and no more trees for currencies.
Note: Actually, coins are the worsts, and they might cost equally same amount as that of their denomination than compared to paper currency, which cost less for printing.
- Theft proof: E-currencies can’t be stolen as they don’t have any physical existence. One would ask about hacking, but the fact is that it is very rare and in fact, all e-thefts happened around can be prevented by us at some But, unfortunately, many of us are not tech geeks to dive into the depths of e-commerce and transactions to nail. Rather, you can get hardcopy proofs of account balance such that if in case any money is stolen from your account the bank shall be held responsible and you can claim it back legally.
- Durable: Since there is no physical existence there is no durability issue too. If in case you lose the card, all you have to do is call the bank and block it, apply for new one and sleep tight! That’s how easy and simple it is!
- Can eliminate inflation: In developing countries like India, under a tight budget paper currency are issued to compensate for the fall, which will cause inflation and hike in prices. Whereas in the case of e- money it climates the zero lower bound in nominal rates of interests thereby bridling any scope for inflation.
If you are looking for advantages, an entire book can be dedicated for that. But the fact is that one must start looking into the future of India’s economy, anticipating how other countries will lead. A change is inevitable, but now we have a breakthrough, which can accommodate a change for good!