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On De-Dollarization : Shifting Monetary Dynamics

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De-Dollariaztion Cartoon by Harshita

The influence of the United States Dollar (USD) in global trade has been substantial, serving as a hallmark of the West’s economic power. Its prevalence has long epitomised the strength of the West, a supremacy established post World War 2. This supremacy of the dollar has been paramount since then, solidifying the dominance of West hegemony and the financial institutions they founded. Consequently, developing nations found themselves compelled to embrace the dollar, apprehensive of the potential leverage that Western powers could exert.

The ascendancy of the Dollar sparked discussions between the nations straddling divergent economic spectra, encapsulated within the NORTH – SOUTH discourse or NORTH – SOUTH debate. Developing nations voiced apprehensions over the disparities that the Dollar’s dominance accentured, and the compulsion to interface with dollars rendered these nations susceptible to the economic decisions of Western powers, prompting dialogues on reshaping the Global Monetary framework to engender inclusivity and equity.

While the prospect of conducting global trade in native currencies holds allure, practical impediments persist. The talk around dealing in National currencies has been in talks for almost every BRICS summit, but it just remains to that. One needs to look at the complexities the IMF’s SDR system possesses.

The Special Drawing Rights system plays a pivotal role in the international monetary framework. It is a composite international reserve asset created by the IMF to supplement its member countries’ official reserves. While the SDR system itself doesn’t directly prevent global trade in local currencies, it introduces complexities that make conducting international trade solely in national currencies challenging. The IMF uses a basket of five currencies to define SDR, which consists of Dollar, Euro, Yen, Pound and Yuan. These currencies are determined by taking two factors into account, whether the currency’s parent country is among the top five exporters in the world and its ease of convertibility. Subsequently, these five currencies are called the HARD CURRENCIES. Such currencies are easily convertible and acceptable in world trade, and currencies like Indian Rupee, Rubles are not fully convertible due to the restrictions on current account convertibility by the central bank, to keep a balance between extreme market fluctuations.

Even though trade in national currencies poses practical challenges to it, developing nations are figuring out other alternatives to level the playing field. The recent BRICS Summit 2023 commanded global attention for the same, raising anticipations for deliberations surrounding a potential BRICS currency as a potential alternative to the dollar. However, the focal point of the summit orbited around the BRICS expansion, inviting Iran, Argentina, Saudi Arabia, Egypt, Ethiopia and UAE. The inclusion of six new members showcased the burgeoning influence of the consortium and its resolve to cultivate collaboration beyond its original composition. The inclusion, interestingly, shows a heavy participation from the Gulf and the Middle East – regions that play a pivotal role in oil exports, including the West.

As the dialogue on reshaping the international monetary landscape continues, the BRICS expansion sends a subtle reminder that while the direct trade in national currencies may currently pose intricate challenges, endeavours like these represent strides toward a more diversified financial landscape. In other words, maybe trade in local currencies is not practically possible for now, but this coalition is a step towards it.


 

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2 Comments

2 Comments

  1. Divyh Mishra

    31/08/2023 at 12:54 PM

    No doubt India made it’s economic growth a leverage by promoting trade in local currency with other countries thus enhancing it’s relationship with them which includes Russia and Iran. So how the India’s posture on this coalition will affect it’s international relations?

    • Nitika

      15/09/2023 at 2:54 PM

      Pros:
      1. Dependency on US dollar will reduce, which in turn, appreciates the INR.
      2. The Indian Economy when trading in local currency, the fluctuations in the deficit be it of current account or capital account, will reduce.
      3. India’s position as a strong market leader will emerge, not dependent upon the mercy of dollar’s exchange rate.
      4. Now given that the world order is multi-polar, International Relations should not be dominated by single currency or even a country and trading in local currencies ensures that no one country gets a hegemony over the global market.

      Cons :
      It is not practically possible given the current scenario where 90% of world trade happens in US Dollar. And changing it overnight is not feasible at all.

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World

Tulsi Gabbard’s Raisina Dialogue Speech Highlights India’s Future Role in U.S. Strategy

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New Delhi, March 19 – In a speech that blended cultural symbolism with geopolitical significance, U.S. Director of National Intelligence Tulsi Gabbard addressed the Raisina Dialogue, emphasizing the deep spiritual and diplomatic ties between India and the United States.

Gabbard, a former U.S. Congresswoman and the first Hindu member of the U.S. House of Representatives, opened her speech with a heartfelt greeting: “Good morning, aloha, namaste, Jai Shri Krishna.” The words, she noted, symbolized the fusion of her Hawaiian roots and Hindu-American identity. Her address came as part of a multinational tour of the Indo-Pacific, a visit strategically timed just two weeks before the Trump administration’s reciprocal tariffs on India and other nations.

Peace, freedom, security, and prosperity were central themes of her speech, with a recurring emphasis on uniting the people of India and the United States. Gabbard leveraged her Pacific roots in Hawaii to reinforce the message of a stronger and more prosperous Indo-Pacific. Since the previous Trump administration, the Indo-Pacific has become a focal point of U.S. foreign policy. The Indian Ocean serves as the theater for four of the world’s major maritime chokepoints, with approximately 80% of global maritime oil trade passing through these narrow passages.

She advocated for a pragmatic, realpolitik approach to world peace, one rooted in economic ties. This stance reflects the recently failed U.S.-Ukraine mineral agreements, which, if successful, would have strengthened economic relations and provided Ukraine with a natural layer of security. While Gabbard did not explicitly reference any specific country or conflict, she stressed that securing peace requires “commitment to fostering cultural and economic ties that reduce the likelihood of an escalation to conflict” and “courage to engage directly with both friends and adversaries alike.”

During her address, Gabbard tackled the growing debate over America’s ‘America First’ policy, clarifying that it should not be misconstrued as ‘America Alone.’ Instead, she stressed the importance of expanding U.S.-India relations, an effort that aligns with Washington’s broader Indo-Pacific strategy. With China’s growing influence in the region, the U.S. has been working to position India as a key strategic counterweight. However, Gabbard asserted that such an alliance can only succeed if the U.S. treats India as an equal partner. In an exclusive conversation with NDTV gabbard stated “the long-time unfortunate persecution and killing and abuse of religious minorities (in Bangladesh) has been a major area of concern for the US government. The talks are just beginning between Trump’s incoming cabinet and the Bangladesh government, but this continues to remain a central focus area of concern.”

She also reaffirmed America’s commitment to strengthening security ties with India, particularly in cybersecurity, emerging technologies, and artificial intelligence. Reflecting on her personal values, Gabbard shared that in both moments of triumph and adversity, she finds guidance in Lord Krishna’s teachings from the Bhagavad Gita.

Gabbard’s visit also included a meeting with Prime Minister Narendra Modi on March 18, during which Modi presented her with a ceremonial vase filled with water from the Mahakumbh, a gesture underscoring India’s appreciation for her long standing support of U.S.-India ties.

As Gabbard continues her Indo-Pacific tour, her remarks at the Raisina Dialogue highlight a future in which U.S.-India relations evolve beyond transactional diplomacy, paving the way for a deeper strategic and cultural partnership.

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RELEASED: GPAI’s New Delhi declaration

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On December 13, 2023, the GPAI Ministers convened in New Delhi for their annual summit, hosted by the Ministry of Electronics and Information Technology (MeitY) in collaboration with the Centre for Responsible AI (CeRAI) at IIT Madras. Blessed by the presence of Honorable PM Narendra Modi, the event included a Research Symposium and a Global AI Expo. This year’s symposium, themed “Responsible AI in Public-Sector Applications,” provided a global platform for researchers to share insights. The Expo showcased AI innovations addressing critical challenges and benefiting society, with the participation of industry leaders, policymakers, innovators, and stakeholders from 38 countries and the EU, including Mr. Ashwini Vaishnaw, serving as the Minister for Railways, Communications, Electronics & Information Technology; and Mr. Rajeev Chandrasekhar, holding the position of Union Minister of State for Entrepreneurship, Skill Development, Electronics & Technology, and Jal Shakti in Government of Bharat.

GPAI collaborates to negotiate a consensus on the approach to AI by crafting a declaration document. Here is what the GPAI’s New Delhi Ministerial Declaration says:

GPAI New Delhi Ministerial Declaration

1. We, Ministers of the Global Partnership on Artificial Intelligence (GPAI), convening in New Delhi on 13th December 2023:

2. Reiterate our unwavering commitment, since the GPAI Council Meeting in Japan last year, to the principles for responsible stewardship of trustworthy AI and values reflected in the OECD Recommendation on AI, as noted in GPAI’s Terms of Reference, rooted in democratic values and human rights, safeguarding dignity and well-being, ensuring personal data protection, protection of applicable intellectual property rights, privacy, and security, fostering innovation, and promoting, trustworthy, responsible, sustainable and human-centred use of AI. 

3. We further affirm our commitment to continue to work within our respective jurisdictions to advance safe, secure, and trustworthy AI, including, as appropriate, through the development of relevant regulations, policies, standards, and other initiatives.

4. We acknowledge the noteworthy progress and achievements under the leadership of Japan as the 2023 Lead Chair with India as the Incoming Support Chair and France as the Outgoing Support Chair. This includes significant efforts related to the strengthening of GPAI as a diverse and inclusive multistakeholder initiative.

5. We applaud the contributions of the Multistakeholder Experts Group (MEG) towards the GPAI projects. We affirm our commitment to supporting the sustainability of GPAI projects by undertaking the adoption of relevant projects, in line with country-specific contexts and priorities as well as the shared interests and priorities of the GPAI community.

6. We recognize the rapid pace of improvement in advanced AI systems and their potential to generate economic growth, innovation, and jobs across various sectors as well as to benefit societies. We acknowledge the need to harness new opportunities and mitigate the risks arising from the development, deployment, and use of such technologies. This includes concerns around misinformation and disinformation, unemployment, lack of transparency and fairness, protection of intellectual property and personal data, and threats to human rights and democratic values. We further acknowledge the need for equitable access to resources, which must be considered, accounted for, or addressed in order for societies to benefit from and build competitive AI solutions. We underscore GPAI’s pivotal role in addressing contemporary AI issues, including generative AI, through applied AI projects aimed at addressing societal problems and global challenges, maximising the benefits and mitigating associated risks.

7. We support the intention of India, as Lead Chair for 2024, in its endeavour to promote collaborative AI for global partnership among GPAI members by supporting projects aimed at promoting equitable access to critical resources for AI research and innovation, such as AI computing, high quality diverse datasets, algorithms, software, testbeds, and other AI-relevant resources in compliance with applicable intellectual property protections and data protection legislations. We reaffirm the importance of fostering (US DEL an)  equitable AI ecosystem (US Add s) that ensures diverse, inclusive and multistakeholder engagement, including from under-represented groups and communities facing vulnerabilities towards the responsible design,  development, deployment, and sustainable use of trustworthy AI.

8. We support the development, in a collaborative manner, of necessary knowledge, skills, infrastructure, policies, risk management frameworks and governance mechanisms to effectively and responsibly leverage AI technologies and applications, including among low and middle-income countries to harness the potential of AI advancements and manage the associated risks, including ensuring robust protection of rights, safety, and security.

9. We embrace the use of AI innovation in supporting sustainable agriculture as a new thematic priority for GPAI. We acknowledge the importance of promoting the development of and access to risk-proportionate trustworthy AI applications for ensuring sustainable food production systems and implementing resilient agricultural practices that increase productivity and production, help regenerate ecosystems, strengthen capacity for mitigation and adaptation to climate change, extreme weather, drought, flooding and other disasters, and that progressively improve land and soil quality, as well as promote inclusion and empowerment of workers in the agricultural supply chain.

10. We commend the efforts undertaken by India, the incoming support chair, the GPAI secretariat, the Expert Support Centres, and the Executive Council to foster enhanced member-expert collaboration and increase the visibility of GPAI, through efforts such as the member-facilitated GPAI working group convenings and the GPAI Innovation Workshop. 

11. We are committed to continuing and strengthening our advocacy efforts to enhance the public visibility of GPAI’s outputs and facilitate the adoption of relevant work wherever feasible. 

12. We note the international community’s efforts over the year to drive international collaboration on AI. To this end, we acknowledge GPAI’s contribution to the G7 leaders’ statement on the Hiroshima AI Process, the Bletchley Declaration, and the G20 New Delhi leaders’ declaration as steps towards working together, in an inclusive manner, to promote trustworthy AI that supports the good of all. 

13. We reaffirm our dedication to strengthening GPAI’s independent and unique identity as a key multilateral initiative for practical approaches to advancing the trustworthy development, deployment, and use of AI. We are committed to positioning GPAI as a nodal initiative that plays a key role in global cooperation on AI innovation and governance, along with its expert support centres. Towards this, we support GPAI’s further engagement with other relevant international fora such as the G20, G7, OECD, UNESCO and other UN bodies, to leverage synergies and avoid duplication of efforts.

14. We reaffirm our commitment to pursuing a diverse membership, with a particular focus on low and middle-income countries to ensure a broad range of expertise, national and regional views and experiences based on our shared values. We are committed to ensuring that GPAI’s mission has a global impact, and helps address diverse global and societal challenges.

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BORROWED DREAMS: THE CANADIAN EXPERIENCE

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“If I would’ve invested the same amount that I did here in Canada, in India, I would’ve had better opportunities in consideration to what I see in Canada” these are the sentiments being echoed by Indian students who spent a good amount of money to migrate to Canada for higher education. 

The Canadian Experience, a documentary made and produced by Insight in collaboration with the Centre for Policy Research and Governance (CPRG) with ANI as Media Partner, sheds light on the reality of Indian students’ life in Canada. With a huge housing crisis, crumbling healthcare, nominal employment opportunities, and a fee discrepancy, Indian Students now would much prefer to stay and study in India rather than migrate to Canada which ranks among the most preferred countries for higher education. 

Along with the USA and UK, Canada has been in the top three most preferred places for pursuing higher education for Indian students. Every year almost 3 Lakh students migrate to Canada, what is so special about it? Is it the lifestyle? Job opportunities? Quality Education? Our documentary exposes that it is none of the above and rather, just the good marketing and the glossy picture being painted by these ‘agencies’ that make families spend lakhs on fulfilling their children’s “Canadian Dream.” 

This documentary interviews two Indian students Ms. Vrinda Kathore and Mr. Namra Shukla who pursued higher education in Canada, and these two students tell tales of not only monetary loss but also lack of basic amenities and racial discrimination. 

Our objective through this documentary is to expose that one realises their mistake almost instantly when they land in Canada. The country has minimal livelihood in its northern part due to the harsh weather conditions, and it is there that the majority of the population has accumulated in Southern Canada, giving rise to a major housing crisis. The year 2022 saw the lowest vacancy rate in the country while rents kept on increasing due to high demand. 

The Rental Market report by CMHC suggests that there has been a 9.6% increase in rental prices from April 2022 to April 2023, i.e., A student who would be paying $1827 in April 2022 now had to pay $2004 in April 2023 for the very same property. It is because of this that international students have to compromise on decent living, and have to often live in overcrowded small apartments with no personal space or hygiene maintained. 

Canada has created an image of a country well-equipped with world-class healthcare facilities but in reality, it is crumbling. Vrinda tells us how her friend who got a burn had to sit in the waiting room for 5-6 hours just to even be looked at by the doctor. She herself got a waiting time of 4-5 months for something as simple as an X-ray since it is classified as a ‘non-emergency’ case.

Canada’s 65% of land is covered in snow, it has long harsh cold winters and short cool summers. It gets difficult for an Indian for whom sunlight is such an essential part of daily life. Seasonal Depression is common in international students who have to spend months with temperatures reaching -40 degrees cel. Namra, who had to live in a basement, shares how he did not see sunlight for days if he didn’t step out, and snow-covered roads make it difficult to commute on a daily basis while the buses halt their operations.

Most students dream that getting good jobs comes with the ‘abroad package’, but the reality is strikingly different, there is a severe lack of job opportunities due to which even the brightest of minds have to work in low-paying jobs just to sustain themselves and pay off their debts. In India, almost all colleges have a placement cell in place that offers internships and job opportunities, however, such is not the case in Canadian colleges [Georgian College, Barrie in this case] which boast of high-paying jobs on their websites. 

Another factor that contributes to Indian students regretting their decision is the discrepancy in fee structure where an international student is paying significantly higher than a domestic student. Where an international student is paying $8000 for a semester, a domestic student is paying $1500 for the same. It is worth noting that while Indian colleges waived or decreased the fee during online classes in the pandemic, no such luxury was given to these students in Canada. It has been calculated that Indian students contribute 8 Billion dollars to the Canadian Economy. 

What will shock you the most is the revelation that Cape Breton University in Nova Scotia admitted students beyond its capacity and is now making Indian students study in nearby Cineplex due to a lack of infrastructure. What should be called out is being marketed as an ‘innovation’ by the college in question. As Vrinda fairly points out- they are running a ‘facade’ in the name of quality education.

Why should a student invest a hefty amount and not even get a proper return? Why should a person choose a place so miserable when they can get far better education and facilities in their own country?

The question remains- Is the Canadian Experience worth it?

Watch the full documentary, made in collaboration with the Centre of Policy Research and Governance (CPRG) and released via Asian News International (ANI) to experience what has yet been unseen and unheard. This documentary went on to feature on a prime time show on NDTV within 24 Hours of release, with subsequent coverage on CNN-News18. 

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