Editorials/Opinions Analysis For UPSC 04 February 2022
Contents:
- Winter is here
- The Digital rupee
Winter is here
Context:
Indian official will boycott the opening or closing ceremonies of Winter Olympics to be held in Beijing from February 4 to 20. This was recently confirmed by the Ministry of External Affairs.
Relevance:
GS II: Global Groupings, Important International Institutions
Dimensions of the Article:
- Reason behind India’s Diplomatic Boycott
- Background
- Diplomatic Boycott by the US and its allies
- Olympic Games and Politics
- Way Forward
Reason behind India’s Diplomatic Boycott:
- The decision followed the announcement of China where it chose a PLA commander as one of the participants of the traditional torch relay.
- The commander was involved in the June 15, 2020 clash in Galwan Valley, an incident that led to the death of a number of Indian soldiers.
- He was feted as a hero by the Chinese and was subsequently given military honours by Beijing.
- The MEA said the commander’s participation in the torch relay was “regrettable”.
- It is seen as an attempt by China to publicise Galwan and highlight the “bravery” of PLA troops.
- Only one athlete from the country — skier Arif Mohammad Khan — is participating in the Winter Olympics along with support staff.
Background:
- Recently India has expressed its support for the games along with Russia, following a meeting of the Foreign Ministers of Russia, India and China.
- Considering the continuing stand-off along the Line of Actual Control, and dealing with the other problems with China, India had initially planned to not involve itself in the politics surrounding the games, Beijing’s torch relay changed that calculus.
Diplomatic Boycott by the US and its allies:
- India’s announced its support for the games in November, 2021. It was at the same time the U.S. and its allies announced a diplomatic boycott because of the human rights abuses of Uyghur Muslims in the Xinjiang region of China.
- It noted the existence of a large network of ‘political re-education’ camps in the region.
- China first denied the existence of the camps, but later said they were for “vocational training”.
- More than a dozen countries have boycotted the Beijing Olympics, which India has now joined. China denounced the boycott as “politicising” the games.
Olympic Games and Politics:
- Olympic Games, through history, have been inherently political events.
- For host nations, holding a successful games carries the promise of burnishing the legitimacy of the government of the day.
- Chinese Political superiority:
- The current event gains political significance domestically in the backdrop of in the context of the country’s battle against COVID-19.
- President Xi Jinping noted that-
- The 2022 Olympics would be “the first international multi-sport event to be held as scheduled since the outbreak of the COVID-19 pandemic”.
- It is an implied message from the Chinese that their ability to successfully conduct the Olympic games during the pandemic is another example of the superiority of the Chinese political model, which has been highlighted as a sharp contrast especially with how the U.S. handled the pandemic.
Way Forward:
- Historically, the Olympics has seen it all being played on its arena.
- The International Olympic Committee(IOA) last year added the word “together” to the official Olympic motto of “faster, higher, stronger”. This is certainly a laudable aspiration
- Hence as far as the Olympics is concerned, the politics is never far away. That will certainly be the case in Beijing.
-Source: The Hindu
The Digital rupee
Context:
Digital Rupee to be introduced by the Reserve Bank of India in the coming financial year. This decision was announced by the Finance minister in the Union budget 2022-23.
Relevance:
GS III: IT & Computers, Mobilization of Resources, Banking Sector & NBFCs
Dimensions of the Article:
- Cryptocurrencies in India
- Recent Developments
- What is Central Bank Digital Currency (CBDC)?
- Way Forward
Cryptocurrencies in India:
- The announcement was followed by the report of central bank officials informing the central board of the RBI of a pilot project for the introduction of a Central Bank Digital Currency (CBDC).
- Recently, RBI Deputy Governor T Rabi Sankar has said that the central bank is “working towards a phased implementation strategy” and will examine the CBDCs in the wholesale and retail segments.
Recent Developments:
- Central banks across the world are exploring the viability, usefulness and value of digital currencies.
- Countries like Bahamas has already issued a digital currency in 2020.
- Countries like Japan, China, Singapore, Sweden are currently examining the various facets of such a transition.
- Recently, the US Federal Reserve has released a report after examining the the costs and benefits of issuing a central bank backed digital dollar.
What is Central Bank Digital Currency (CBDC)?
- They are essentially fiat currencies issued in the virtual/electronic form.
- Reasons for the interest in issuing CBDCs:
- the rapid surge of cryptocurrencies,
- the increasing popularity of blockchain technology, and
- the benefits that many argue stem from its adoption
- Benefits of issuing CBDCs include:
- the acceleration of financial inclusion,
- lower costs for financial transactions, especially in the case of cross-border transactions,
- the advantages of an alternate payments system,
- the creation of another instrument in the monetary policy arsenal of central banks,
- the likely adverse impacts on corruption and money laundering, etc.
- However, to what extent these benefits actually materialise will vary from country to country depending on its specific economic scenario.
- What are possible risks associated?
- There are several risks associated with the introduction of CDBCs.
- Implications on Banking system: During periods of extreme uncertainty, depositors may choose to migrate away from commercial banks, causing financial disruption.
- Anonymity: There is also the question of whether CBDCs will offer the same degree of anonymity as cash does.
Way Forward:
As pointed out by several economists, though there are several benefits that may accrue at the wholesale level, the real transformation, and the challenge as well, lies at the retail level.
It is imperative of the central bank to thoroughly consider the prospects of Digital Rupee in India after weighing the pros and cons and the economic implications of it.
The RBI must be cautious and a mindful of various issues, the design considerations and implications surrounding the introduction of the digital currency.
-Source: The Indian Express
