The Hindu Editorial Analysis | 24th November '21

Table of Contents

Crypto, Not Currency | ToI

Cryptocurrencies (cryptos) are all over
Sydney Dialogue – Prime Minister called on democracies to work together on cryptos so that ‘they do not fall into the wrong hands and spoil our youth.’
The RBI governor, for his part, has repeatedly expressed concerns about cryptos being a threat to our macroeconomic and financial stability.
The government will introduce a bill in the winter session of the Parliament for regulation of cryptos that, in a departure from its earlier stance of a total ban, will in fact allow some space for them to operate.
If cryptos are such a big threat, why does the government want to keep the door partially open?
And why are the government and RBI seemingly not on the same page?
The crypto world can become like the wild west with cryptos becoming conduits for illegal activity – money laundering, drug trafficking, financing of terrorism and defrauding of gullible investors.
Recognising cryptos as an asset class and regulating them will allow the government to monitor the trading activity, tax the capital gains of investors and enforce some standards of transparency and a code of conduct
RBI fear: cryptos will erode their monetary sovereignty
The story can be quite different with the second wave of cryptos called stablecoins.
While Bitcoin has no intrinsic value since it is backed by no more than an algorithm, these stablecoins are backed, one to one, by a reserve asset such as the dollar.
The central bank in turn will lose its ability to set the interest rate, calibrate the money supply and control inflation.
Consider Diem – the stablecoin proposed to be issued by Facebook.
Given Facebook’s client base running into billions and its wide swathe of enticing services, it is not farfetched to imagine that the Diem will become a viable competitor to fiat currencies.
As the use of domestic currency declines, the central bank’s monetary policy will lose traction.
Cryptos would become conduits for capital outflows as investors put domestic money in the crypto exchange and exit out of it abroad in a hard currency.
China is reported to have lost as much as $80 billion via cryptos last year before it banned all crypto transactions this September.
Managing the capital account consistent with their inflation targets is already a complex challenge for emerging economy central banks like RBI.
Volatility in the value of cryptos
The value of Bitcoin, for example, fluctuated between $1,000 in 2017 and close to $70,000 more recently.
When the RBI buys assets such as government securities, it pays for them by printing currency – in effect creating money out of thin air.
Internationally, regulatory responses to cryptos have fallen into three broad categories.

Passive tolerance which involves prohibiting regulated institutions from dealing in cryptos without explicitly clarifying their legal status.
A total ban like in China
To follow countries such as the UK, Singapore and Japan that have allowed space for cryptos to operate under a regulatory radar but without recognising them as legal tender.

Why Cities Must Lead The Climate Battle | TH

Cities across the world today are on the frontlines of the battle against environmental change.
It is therefore shocking that the Glasgow Climate Pact that results from the 26th Conference of Parties makes no explicit mention of the critical role of urban areas in finding solutions to the climate problem.
For the first time in the history of the world, more people live in towns and cities than in rural areas.
Towns and cities are responsible for producing over threequarters of the world’s carbon emissions that cause the climate to change.
Additionally, urban areas are disproportionately located along coasts and rivers, highly exposed to climate-induced disasters such as floods and sea level rise.
With over one in three urban residents living in slums and one in four earning less than $2 a day, cities also contain vast numbers of people who lack the capacity to withstand the impacts of a changing climate.
All the signs are pointing to the fact that our cities will continue to experience shocks such as the floods in Chennai (this month and in 2015), heatwaves (such as the one in Ahmedabad in 2010 that claimed more than 1,000 lives) and water scarcity (such as in Maharashtra in 2016 when water had to be shipped in on trains).
More subtle impacts will include the deteriorating health of urban residents due to changing disease patterns, an increase in violence due to extreme heat and as a result, overall reduced wellbeing of city dwellers around the world.
All this will also impact the economic productivity of urban areas that currently account for over 80% of the world’s GDP.
Front-runner cities like Surat and Pune have developed these, providing a model for others.
Apart from developing the plans, it is important that those running cities have the know-how to execute them.
A good example of this is Maharashtra’s recent commitment to ensure that 43 cities in the state systematically reduce emissions.
A key component of equipping cities to deal with climate change is the provision of finance.
Our state governments must enable cities to generate their own streams of finance for tackling climate change.
One way is by issuing municipal green bonds that have been used by cities such as Cape Town to raise large amounts of money to deal with crippling water scarcity.
There is no legal hurdle for Indian cities to issue these (in fact cities such as Pune have issued bonds in the past) but there is a lack of understanding and most cities also lack the basic financial systems for issuing these.
The international community must enshrine a commitment to sharing lessons and increasing the ability of our cities to employ such innovative financing approaches in future climate agreements.
Any move to help cities deal with climate change must have slum dwellers, rickshaw pullers, vegetable vendors, hospital attendants….interests at its core.

Transition troubles | TH

Sudanese military chief Gen. Abdel Fattah al-Burhan’s decision to reinstate the ousted Prime Minister, Abdalla Hamdok, is a climbdown from his attempt to consolidate power in his hands.
On October 25, Gen. Burhan dissolved the Sovereignty Council, in which the military had shared power with civilian leaders, declared a state of emergency and imprisoned Mr. Hamdok, imperilling the country’s painful transition from dictatorship to democracy.

Protesters, who toppled Omar al-Bashir’s military-backed dictatorship in 2019 and then resisted the military’s attempts to seize power, were back on the streets.
Despite the military regime’s use of force the demonstrations continued, challenging Gen. Burhan’s power grab.
He also came under heavy international pressure, especially from the U.S., which had removed Sudan from the list of terror-sponsoring countries last year.
The Biden administration froze aid worth $700 million after the coup and made it clear to the generals that any improvement in ties would be linked to the reinstating of Mr. Hamdok.
Gen. Burhan finally decided to reinstate him and release all political prisoners arrested after the coup.
He also said the military would support the country’s transition into democracy and elections, scheduled for July 2023.
While the deal points to the limits of the military, it does not necessarily mean that the transition will be smooth.
Ever since Mr. Bashir was forced out of power, the military has been reluctant to share power with the civilian leadership.
It was forced to make some concessions only because the country’s revolutionaries have acquired critical mass support which the generals can no longer ignore.
Mr. Hamdok, a British-educated economist who had worked with the UN, is in an unenviable position.
He refused to resign while under house arrest and continued to resist the military coup, which inspired the protests.
But his decision to reach a deal with the generals has turned at least sections of the protesters against him.
And if street protests continue, it could undermine his government and weaken his negotiating capacity with the generals.
To address these challenges, he should first win back the trust of the pro-democracy parties and organisations, and form an independent government with civil society representatives that should put the country’s fraught transition process back on track.
The military may have taken a step back, but it could try to usurp power again.
To prevent any such scenario, Sudan’s civilian leaders should stay united and take the country to full democracy and a new constitutional order.

NEWS

President Kovind to address Birth Centenary Celebrations of Chaudhary Harmohan Singh Yadav today
PM Modi to lay foundation stone of Noida International Airport in Uttar Pradesh tomorrow
Nitin Gadkari to lay foundation stones for 25 National Highway Projects in Jammu today
India expresses its commitment towards vision of free, open, inclusive and rules-based Indo-Pacific
India agrees to release 5 million barrels of crude oil from its Strategic Petroleum Reserves
NITI Aayog launches Sustainable Development Goals Urban Index and Dashboard 2021-22
Over 118 crore 48 lakh COVID vaccine doses administered in the country so far; Recovery rate stands at 98.32 per cent
India, US reaffirm their commitment to take economic relationship to next high level
COVID-19: No booster dose required in country as of now, says AIIMS Director
LS Speaker Om Birla inaugurates Workshop on Clean India Mission in ‘Kapilvastu Mahotsav’ in UP’s Siddharthnagar district
Central team visit flood-hit Puducherry villages to assess damages
Railways links Universal Pass issued by Maharashtra govt with UTS app
Central team to meet Tamil Nadu CM M K Stalin after their visit to rain-affected areas in state
Maharashtra records 766 new cases of COVID-19
Tamil Nadu registers 741 new cases of COVID-19
US bombers accused of rehearsing nuclear strike on Russia