MUMBAI, INDIA – Every year in the fall, Indians gather to celebrate the triumph of good over evil, symbolized by a mythical battle between the ten-headed, twenty-limbed demon king, Ravana and the human incarnation of Lord Vishnu, who took the mortal form of Rama in order to bypass his enemy’s divine protection and defeat the wicked deity. Rama’s homecoming after the epic victory is commemorated soon after by the much more well-known Diwali festivities, which sees millions of candles and lanterns illuminate homes, temples and rivers all across the South Asian country.
Often called the Festival of Lights, the celebrations are timed to coincide with the darkest day of the year and is a grand affair intended to augur prosperity, happiness and good health. However, the five-day-long revelries were interrupted this year by a solar eclipse on the very day Diwali was supposed to end with the observance of Govardhan Puja, celebrating Lord Krishna’s introduction of Dharma into the world.
Astrologers consider the eclipse to be inauspicious, portending volcanic eruptions, wars and even tsunamis. Further concern due to a total lunar eclipse set to occur on November 8, has practitioners of the ancient art of divination worried that bad omens will be compounded as a result of these astronomical phenomena taking place on the same day of the week. Advice to mitigate the negative effects include chanting mantras, and donating any type of grain or raw salt.
Such hedges against the wrath of celestial divinities might prove more difficult in the near future as India gets set to take over the presidency of the G20 in December and preside over the creation of “a new architecture on global supply chains” and the roll out of Central Bank Digital Currencies (CBDC) and regulated cryptocurrency infrastructure across the world, as part of its dual mandate for the country’s year long term at the head of the multilateral organization.
India’s wholesale CBDC pilot program was launched between eclipses on Tuesday, joining several other international testbed initiatives, like Project Icebreaker – a cooperative effort by the central banks of Israel, Norway and Sweden, coordinated by the Bank of International Settlements (BIS) –, and a parallel CBDC project in Australia, which opened for submissions in September and will select a pilot by December.
Momentum towards the institutionalization of cryptocurrencies has gained significant steam during the month of October as both the Organization for Economic Cooperation and Development (OECD), and the Financial Stability Board (FSB) issued their cryptocurrency and CBDC regulatory frameworks within two days of each other. While OECD recommendations oscillate around questions of cybersecurity and money laundering, the FSB’s focus remains largely on matters pertaining to financial risk and compliance with ‘green’ economy disclosure protocols.
India, an important stakeholder in the global technology ecosystem, has been chosen to oversee the transition into a full-fledged data economy and tokenization of natural resources, physical commodities and every kind of human activity. When its tenure at the G20 concludes in November, 2023, the walls of the cybernetic enclosure will have grown higher and our collective ability to escape the digital dragnet will have diminished considerably.
Geo-fenced Money Markets
At the end of September, India hosted the UN Security Council’s Counter-Terrorism Committee (CTC), and “unanimously adopted” the Delhi Declaration, “a set of non-binding guiding principles to assist Member States to counter the threat posed by the use of new and emerging technologies for terrorist purposes,” in concert with experts from the Financial Action Task Force (FATF), a G7 intergovernmental organization combating terrorist financing and money laundering, which also called for nations to implement the “travel rule” for cryptocurrencies, entailing the collection of personal data and transaction history.
Countries that fail to adopt the FATF’s set of recommendations are placed on its Non-Cooperative Countries and Territories (NCCT) black and grey lists. Iran, North Korea and Haiti are notable examples of nations that have run afoul of FATF’s standards and thus, find themselves under considerable economic duress despite the fact that the FATF does not have any formal authority. It has, nonetheless, proven to be among the most effective weapons for the imposition of economic policies by the West on the rest of the world.
Needless to say, digital currencies offer a whole new level of control. Instead of relying almost exclusively on political jockeying, policies can be programmed directly into the currency itself. The BIS’ Project Icebreaker is focusing on the design of CBDC cross-border payment systems that can do just that, and contrary to popular opinion, its most recent report makes clear that non-CBDC cryptocurrencies, such as Bitcoin, are a key aspect of the broader objectives and hardly seen as a threat.
Interlinking all of these digital currency systems will take place at the “retail” CBDC level, the equivalent of M1 or cash that moves through the regular economy, while “wholesale” CBDCs will be reserved for interbank transactions and securities settlement. India’s wholesale CBDC pilot is geared towards secondary market transactions in government securities, and has plans to launch a retail CBDC pilot in December when it takes over the G20 presidency.
Almost a third of the agenda during India’s G20 term will revolve directly around finance and the construction of a new, digital financial architecture and cryptocurrency regulation. The remainder will not stray too far with broader policy questions surrounding environmental and social issues that ultimately link back to the tokenization of life on Earth through digital currencies and blockchain.
Modi’s flagship G20 program is called Mission LiFE (lifestyle for environment), which seeks to “mobilize one billion Indians as well as people in other countries to become individuals who practice sustainable lifestyles”. Though largely a public relations ploy, Mission LiFE nevertheless underscores the fundamental thrust behind India’s impending role at the G20 and “the power to shape global policy agenda around a plethora of key issues that will mold the new economic order as we know it.”
Fronting Down Under
The trilateral Supply Chain Resilience initiative (SCRI) between India, Japan and Australia “seeks to ensure global supply chains remain resilient to future ‘black swan’ events, such as pandemics and geopolitical tensions”, according to the Pacific Forum, an Atlanticist think tank that merged with the Center for Strategic and International Studies (CSIS) in 1989.
SCRI’s “focus on digital technologies” further points to how India’s G20 presidency will be used to reconfigure supply chains along the lines of the burgeoning data economy in tandem with the Indo-Pacific Economic Framework for Prosperity (IPEF), which was launched in May by the White House in conjunction with a dozen countries in South Asia to “strengthen our ties in this critical region to define the coming decades for technological innovation and the global economy”.
Australia, member of both the SCRI and IPEF in addition to the Quad (which is just the SCRI with the US included), is a critical player in the push towards the tokenization of natural resources through its own digital currency pilot project. Offering “the potential to deliver new economic and social value […] to the welfare of the Australian people,” the Australian central bank and the Digital Finance Cooperative Research Centre (DFCRC) embarked on a mission to tokenize real world assets.
Created by the Australian government through $181m in seed funding in June of 2021, the DFCRC began a ten-year “research program examining the digitisation of real-world assets”, including the tokenization of commodities and precious metals, property and the development of CBDCs. According to Dr. Andreas Furche, DFCRC’s CEO, the focus will lean heavily towards “the mining industry”.
Furche, whose cryptocurrency expertise dates back to its most obscure origins as the former regional CEO of David Chaum’s DigiCash pre-Bitcoin digital money experiment, is confident that the initiative will “pave the way for new types of investable assets and whole new markets.” With an additional $121 million pouring into the program from industry partners like Digital Asset and the National Stock Exchange of Australia, India’s capacity to front for Western interests in the Global South will determine how quickly we enter a fully tokenized economy.