What the RBI needs now is expertise in the three Cs of millennial money – Cashless transactions, Cybersecurity and Cryptocurrency.

Why guitar geek Viral Acharya may be what the doctor ordered for RBIs millennial money bluesScreenshot/YouTube
Voices Finance Thursday, December 29, 2016 - 17:11

When Raghuram Rajan walked in to lead the Reserve Bank of India (RBI) from its colonial era Ballard Estate headquarters in 2013, eyebrows rose among orthodox economists because he was technically not considered one of them. While he had a PhD for a thesis on "Essays in Banking" from the prestigious Massachussetts Institute of Technology, his earlier education included a BTech degree from IIT, Delhi and an MBA from IIM, Ahmedabad.

"You want to put an engineer-manager to run monetary policy?" they seemed to say. Rajan proved them wrong by showing there was more to the RBI than setting interest rates – such as cracking the whip on bad lending by banks like a stern manager would do.

A decision by the government this week to name one of his fans, Viral Acharya, as one of RBI's four Deputy Governors may raise eyebrows again. But this time, the bosses in New Delhi may be right on the money – literally. They call him the "Poor Man's Raghuram Rajan" but he may yet be the new, improved version. Because money is not what it used to be.

The 42-year-old Acharya plays the guitar, loves Kishore Kumar songs and has even released an album of his own compositions. What's more, he holds a BTech degree in Computer Science from IIT, Mumbai, for whom he also played cricket.

Money has become so technology intensive that, before long, conventional yardsticks such as inflation, growth rate and savings rate may need to be combined with a deep perspective drawing from a geek's knowledge of the innards of computing. You could say the RBI now needs expertise in the three Cs of millennial money - Cashless transactions, Cybersecurity and Cryptocurrency.

We know by now that cashless deals are hot, with mobile wallets such as MobiKwik, PayTM and Freecharge joining the ranks of Visa and Mastercard, and mobile handsets in India buzzing with e-payment as Prime Minister Narendra Modi puts pressure on the people to move beyond paper money.

But what is less observed is how cybersecurity becomes important -- because phishing and identity thefts could be compounded when hundreds of millions of digital illiterates go cashless. Just remember that neighbour Bangladesh's central bank lost $81 million in a cyber heist by hackers, not masked robbers.

Now comes the third C – Cryptocurrency – which is virtual money and its variants such as bitcoins that do not even need bank endorsement.  

New technologies such as blockchain enable technological footprints that allow two parties to transact in a secure way without a real regulator coming in. You can call that millennial money, and it would take more than macroeconomics for a central banker to figure things out in a world where geeks can more or less "manufacture" money without it necessarily being counterfeit.

We also know of peer-to-peer lending platforms (such as Faircent.com and Lendbox.in) which are already being policed by the RBI.

In such a backdrop, it pays to have a geek who knows both technology and economics. 

And Viral Acharya could just entertain macro-economists among his colleagues with the Kishore Kumar number "Paisa Yeh Paisa" from the film Karz (appropriate, no?) on Friday afternoons as a bonus.

Oh, by the way, Acharya also has a PhD in finance, with pretty much the same thesis subject as Rajan.  And he has spoken on everything from shadow banking in China to the politics of central banking.

But I do suspect that if he strums his guitar and sings "Demonetisation Blues", the bosses in New Delhi may make him face the music. No, he would not want to go where Raghuram Rajan did.

(The author is a senior journalist who has worked for Hindustan Times, Business Standard and Reuters. He tweets as @madversity)

Note: Views expressed are personal opinions of the author.

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