Crypto Currency: the “New Avtaar” need to legitimate and developing a regulatory framework : IIF Study

There is an urgent need to create legitimate and developing regulatory framework for crypto currency and other crypto products, as this allows billions/trillions of money being transacted globally without any checks and balances. Crypto currency is fast emerging as money internationally despite the fact that it poses a threat to national security, individuals wealth and nations apart from the ills any speculative product brings with it to meet the needs and greed of a specific group of people and rouge identities concludes a study published in the latest issue of Finance India.

According to authors in order to promote efficiency in the money markets, transactional efficiency and generating wealth along with positive contributions to GDP and people at large there is a need of setting up of “M5” as Money supply measure with Crypto-Currency along the lines of inclusion of other currency products developed in the last 50 years. Authors consider “Money (Currency)” as a valuable Resource and a Wealth of the Nation, having potential to generate and mobilize more wealth.

The study is published in a lead Article entitled “The Theory of Money, Wealth and Efficient Currency Markets: Modeling M5 as Money Supply with Crypto-Currency” in the latest issue of Finance India Vol XXXII No. 2, June 2018. by Prof J.D. Agarwal, Chairman and Professor of Finance, Indian Institute of Finance, Prof. Manju Agarwal, Prof. Aman Agarwal and Prof. Yamini Agarwal, Deans and Professors, Indian Institute of Finance

The study proposes that given the emergence of digital modes of money transactions, there is an urgent need for creation of legitimate Crypto-Currencies by National Governments to induce confidence and laissez faire through transactional efficiency in money markets. Government Intervention (or Central Banks) to generate the nationally Crypto-Currency or central bank digital currency (CBDC) is the need of the hour and critical for tomorrow’s normal economic and business conditions in an economy when businesses and labor market source are global and are looking for currency efficient enriched sources.

Referring to their previous researches, Agarwals critically evaluate various theories on Money and how and why M5 as a Money Supply indicator is needed for inducing Crypto-Currency in the basket of Currencies by Central Banks worldwide. According to the authors, there is a deep interlock between Financial Inclusion, Banking and Digital Dividends which foster creation of social security facilities; employment growth and a social equilibrium in the society reducing in-equalities of income and socio-economic gender gaps. Global Dis-equilibrium and interdependence; unemployment; establishing balance between need for survival, socio-economic growth; and environment discipline; focus on issues to build sustainable future in an interlocked global economic environment; digital revolution, dividends and security are major concerns and global challenges before the economies in Asia and the World today.

According to the authors, given the emergence of Crypto-products defying the nomenclature of being a tenable asset class in the informal sector with multiple players, it has become difficult for National Governments to regulate and calibrate the supply of money and its effects through Monetary Stabilization measures adopted by them, as these crypto-products allow billions/trillions of money be transacted globally without any checks and balances. More than the benefits, these products are emerging as threat to National Security; Individual’s Wealth and Nations apart from the ills any speculative product brings with it to meet the needs of Greed of a specific group of people and rouge identities. Hence, the need for governments to act fast and consider to induce this financial innovation (crypto-currencies) as a currency of tomorrow into its basket of currencies, as done with various other monetary products in the last 6 decades is pertinent and in-evitable.

The proposed Model of creating efficient Money Market through modeling of M5 will facilitate an automatic way for transactional efficiency, generating wealth for the Nations, firms and people-at-large, through easy access to currency and opportunities for jobs and growth. It would also help save currency costs in a Market Driven Economic System with Asymmetric Information. The “New Avtaar” of Money in the form of Crypto would witness the change the way money (currency) has looked traditionally for centuries in the form of gold, silver, leather, wood, metal, paper, plastic and many others to a faceless virtual fully fractional form, but only when launched by Nations (via their Central Banks) opined Agarwals.

Finance India – 400 page The quarterly journal of finance published by Indian Institute of Finance, published since 1987, is placed at 3rd best world wide in SJIF Journal Rank out of 21,000+ Journals having Impact Factor of 6.778 (2018); It is also rated 3rd WORLDWIDE by American Statistical Association (Business and Economic Data link) (August 2002); ISI Impact Factor of 1.518 (2017-18) and ICI Index Factor 73.22 (2015) and is included in Scopous. Finance India is ranked at par with top international journals.

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This release was published on openPR.