More Trouble Brewing in IndiaIndia’s stock markets tumbled today after a brief rally following the crash from the oil price war. Yields on 10-year debt dropped to 5.99%, the lowest point since the financial crisis of 2008. The rupee has also dropped in value by 0.5% against the U.S. dollar. The market does not look like it’s in the best condition, as officials race to mitigate damage. Their approach is to reduce long-term yields and introduce long-term repurchasing agreements (Repos). The State Bank of India, which is behind Yes Bank’s rescue, is also experiencing its own challenges. A recent IPO saw it being oversubscribed 26.54 times on the final day of bidding. Largely as a result of the coronavirus, the SBI Cards and Payment Services (SBI Card) saw its shares listed at an extreme discount, dropping over 65% on Tuesday morning. On the whole, however, the bank is showing good growth.
Digital Assets Stand as a SolutionThough India’s Supreme Court recently lifted the ban on banks serving cryptocurrency exchanges, India has its fair share of naysayers when it comes to digital currencies. These are mostly the same ones pushing the false narrative that cryptocurrencies and blockchain technology only exist to aid illicit activity. It is actually quite the contrary, as cryptocurrencies and blockchain technology are the most tamper-proof, transparent, and fraud-resistant technologies available, capable of overcoming the exact problems that the Indian financial system has been facing over the past few years. A digital rupee would have but a fraction of benefits from a truly decentralized currency and, in general, the application of smart contracts can instantly resolve disputes and prevent loopholes from being exploited. Perhaps most significant of all is the fact that India is in a prime position to catch up with China when it comes to the technology, which has had to deal with the coronavirus just as it was planning to trial its Central Bank Digital Currency (CBDC). India, which is only just working with the technology, has the potential to digitize its economy and draw in the many unbanked into the economy. The country’s leaders should see blockchain and cryptocurrencies as an opportunity, rather than fear it without giving it due attention.
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