Tuesday, 21 February 2017 18:56

US Govt, tech firms behind India's cash moves: claim Featured

By Doron Beer

A number of the world's largest tech and finance companies and their leaders are part of a group behind a global war on cash, it has been claimed.

The US Government, working through global financial institutions and big tech organisations, such as eBay, Microsoft, MasterCard and Visa, is the key driving force behind the push to eliminate cash from the global financial system.

According to the Real-World Economics Review (RWER) blog, the decision by Indian Prime Minister Narendra Modi on 8 November last year to ban the circulation of 86% of cash was borne out of a strategic partnership between the US Government’s development agency, USAID, and India’s Ministry of Finance.

The ban on cash was foreshadowed four weeks earlier when USAID announced the establishment of "Catalyst: Inclusive Cashless Payment Partnership", an initiative aimed at effecting a quantum leap in cashless payment in India.

The press statement on 14 October stated that Catalyst "marks the next phase of partnership between the Ministry of Finance and USAID to facilitate universal financial inclusion".

The statement, however, is no longer on the list of media statements on the USAID website, and can only be found if one knows its exact URL.

The apparent necessity of Catalyst was based on a report titled "Beyond Cash", which was commissioned in 2015 by USAID and presented in January 2016, the RWER blog said.

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The conclusion of this report identified what is referred to as "the multiple co-ordination problem", which is referred to in a statement by Badal Malick, the chief executive of Catalyst.

"Catalyst’s mission is to solve multiple co-ordination problems that have blocked the penetration of digital payments among merchants and low-income consumers," Malick commented.

"We look forward to creating a sustainable and replicable model. ...While there has been... a concerted push for digital payments by the government, there is still a last mile gap when it comes to merchant acceptance and co-ordination issues.

"We want to bring a holistic ecosystem approach to these problems."

The Beyond Cash report also found that only 55% of Indians have a bank account, suggesting that the players behind Catalyst knew in advance that making bank notes worthless would affect many Indians, particularly the poorest.

According to RWER, one of the most important entities in the war on cash is the Better Than Cash Alliance, an organisation that has USAID as a member.

The Alliance was founded in 2012 to push back cash on a global scale; its secretariat is housed at the United Nations Capital Development Fund (UNCDF) in New York.

The Better Than Cash Alliance has the Bill and Melinda Gates Foundation and the MasterCard Foundation as its biggest donors – both stand to gain substantially from curbing cash circulation.

Members of the alliance also include Visa, Ford Foundation and USAID while the Omidyar Network of eBay founder Pierre Omidyar and Citi are important contributors.

Almost all of these entities are mentioned as individual partners in the USAID-India-Initiative.

Microsoft co-founder Bill Gates recently met India’s IT minister to discuss Microsoft’s collaboration with "Digital India".

Washington and large IT and credit card companies have dual motives for waging the war on cash, with the business-oriented profit motive the obvious one, according to RWER.

For credit card companies Visa and MasterCard, the banning of cash increases reliance on their services and boosts their business.

IT companies would be better able to survey customers' activity when most payments are made digitally. They can monitor data by tracking international payments through banks, as financial data tends to be the most important and valuable.

Additionally, the status of the dollar as the world’s default currency and the dominance of US companies in international finance bestows tremendous power on the US in a non-cash financial system, RWER argues.

It says a German factory firm doing legal business with Iran was put on a US terror watchlist, which meant it was excluded from the financial system and this prompted logistics companies to stop transporting their furniture.

International banks would also operate at the whims of the US Government, as revoking their licence to do business in the US or using the US dollar as currency would basically amount to shutting them down, RWER said.

This was made evident when Deutsche Bank had to negotiate with the US Treasury for months and given the ultimatum of either paying a fine of US$14 billion — enough to cause bankruptcy — or getting away with paying US$7 billion to settle a probe into mortgage securities.

The power of having the ability to conduct payments exclusively by electronic means was starkly demonstrated when Julian Assange and WikiLeaks had their payments cut off by US-based payment gateways PayPal, MasterCard and Visa in 2010.

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