A New Currency Paradigm Meets The Coming COVID-19 Crisis

A bank clerk scrutinizes $100 US banknotes in Seoul, South Korea.
A bank clerk scrutinizes $100 US banknotes in Seoul, South Korea.
Carl-Johan Karlsson

PARIS — For each passing day, as a perfect storm where both demand and supply plummet together across the world, the 2008 crisis starts to pale in comparison. Economists are thinking hard behind the scenes, with some pondering post-War recovery plans and others looking to earlier pandemics, like the 1918 Spanish flu, for guidance.

But comparisons with the past shock events are a poor playbook for our insta-globalized age. In one other crucial way this moment is different, even from 2008: currency. The way money is created, distributed and even conceived of reaches new inflection points every year. Indeed, a new monetary paradigm has been underway for some time, and the question today is whether the now accelerating shift will only snarl up the already intricate paths ahead, or rather, reach its consecration and blaze a trail to faster recovery and a more resilient economy.

Even before our attention turned to economic recovery, worries about the virus transmitting, literally, through dirty money raised the question if COVID-19 would spell the death of cash. The consecration of a fully digitalized payment system, already well established in countries like Sweden and South Korea, has been questioned for issues such as cyber security, lack of internet connectivity and inaccessibility for the elderly. But even this debate seems almost trivial now as much bolder ideas are percolating within the walls of central banks.

The concept of a digital dollar to provide U.S. taxpayers with stimulus payments during the pandemic was recently floated by U.S. lawmakers, and while the proposal fell by the wayside, such initiatives are under way in both France, where a digital euro is currently under trial, and in China where the digitization of the yuan is reaching the end of the pipeline.

Indeed, as the global economy is on track for its steepest slowdown since the Great Depression, the need to provide people with money fast and directly is now making reality of ideas which has so far only been experimental. But while a digital currency can solve some issues, such as — in the nearest-term — getting governments out of the logistical nightmare of a cash and check-based stimulus plan, it raises questions about what technology will underpin the systems, especially as many central banks have argued that the blockchain technology supporting major cryptocurrencies like Bitcoin is not yet fully vetted.

However, banks can only remain impartial to technologies for so long. If blockchain becomes the way, would it then be interpreted as an endorsement of other, non-centralized cryptocurrencies? We're already seeing micro-examples of state-currencies falling, like in the small Italian town of Castellino del Biferno, where the mayor has begun printing its own "Ducati" bills to help out the most vulnerable of the town's 550 inhabitants. Such community currencies have been issued before, like during Argentina's crisis in 2001 when the government of the province of Buenos Aires printed the quasi-currency "Patacones' to pay government bills, or after the 1930's Great Depression, when a wide range of regional fiats were issued in the U.S., Germany, Austria and Switzerland.

Today however, with a multitude of decentralized options available, there might be no back to normal. Behind the already thorny technological and regulatory questions, there is also the issue of the world moving deeper into a faceless economic system already too complex for most people to understand. The domino effect of the 2008 crisis impacted, in big ways and small, every person alive. Yet few could explain the mechanisms that actually led to foreclosure on their house or the elimination of their job. Radical changes to currency may help us accelerate the recovery, or it could undermine the most basic trust that guarantees a citizen's relationship with the economy.

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Ecological Angst In India, A Mining Dumpsite As Neighbor

Local villagers in western India have been forced to live with a mining waste site on the edge of town. What happens when you wake up one day and the giant mound of industrial waste has imploded?

The mining dumpsite is situated just outside of the Badi village in the coastal state of Gujarat

Sukanya Shantha

BADI — Last week, when the men and women from the Bharwad community in this small village in western India stepped out for their daily work to herd livestock, they were greeted with a strange sight.

The 20-meter-high small hill that had formed at the open-cast mining dumpsite had suddenly sunk. Unsure of the reason behind the sudden caving-in, they immediately informed other villagers. In no time, word had traveled far, even drawing the attention of environment specialists and activists from outside town.

This mining dumpsite situated less than 500 meters outside of the Badi village in the coastal state of Gujarat has been a matter of serious concern ever since the Gujarat Power Corporation Limited began lignite mining work here in early 2017. The power plant is run by the Power Gujarat State Electricity Corporation Limited, which was previously known as the Bhavnagar Energy Company Ltd.

Vasudev Gohil, a 43-year-old resident of Badi village says that though the dumping site is technically situated outside the village, locals must pass the area on a daily basis.

"We are constantly on tenterhooks and looking for danger signs," he says. Indeed, their state of alert is how the sudden change in the shape of the dumpsite was noticed in the first place.

Can you trust environmental officials?

For someone visiting the place for the first time, the changes may not stand out. "But we have lived all our lives here, we know every little detail of this village. And when a 150-meter-long stretch cave-in by over 25-30 feet, the change can't be overlooked," Gohil adds.

This is not the first time that the dumpsite has worried local residents. Last November, a large part of the flattened part of the dumpsite had developed deep cracks and several flat areas had suddenly got elevated. While the officials had attributed this significant elevation to the high pressure of water in the upper strata of soil in the region, environment experts had pointed to seismic activities. The change is evident even today, nearly a year since it happened.

It could have sunk because of the rain.

After the recent incident, when the villagers raised an alarm and sent a written complaint to the regional Gujarat Pollution Control Board, an official visit to the site was arranged, along with the district administration and the mining department.

The regional pollution board officer Bhavnagar, A.G. Oza, insists the changes "aren't worrisome" and attributes it to the weather.

"The area received heavy rain this time. It is possible that the soil could have sunk in because of the rain," he tells The Wire. The Board, he says, along with the mining department, is now trying to assess if the caving-in had any impact on the ground surface.

"We visited the site as soon as a complaint was made. Samples have already been sent to the laboratory and we will have a clear idea only once the reports are made available," Oza adds.

Women from the Surkha village have to travel several kilometers to find potable water

Sukanya Shantha/The Wire

A questionable claim

That the dumpsite had sunk in was noticeable for at least three days between October 1 and 3, but Rohit Prajapati of an environmental watchdog group Paryavaran Suraksha Samiti, noted that it was not the first time.

"This is the third time in four years that something so strange is happening. It is a disaster in the making and the authorities ought to examine the root cause of the problem," Prajapati says, adding that the department has repeatedly failed to properly address the issue.

He also contests the GPCB's claim that excess rain could lead to something so drastic. "Then why was similar impact not seen on other dumping sites in the region? One cannot arrive at conclusions for geological changes without a deeper study of them," he says. "It can have deadly implications."

Living in pollution

The villagers have also accused the GPCB of overlooking their complaint of water pollution which has rendered a large part of the land, most importantly, the gauchar or grazing land, useless.

"In the absence of a wall or a barrier, the pollutant has freely mixed with the water bodies here and has slowly started polluting both our soil and water," complains 23- year-old Nikul Kantharia.

He says ever since the mining project took off in the region, he, like most other villagers has been forced to take his livestock farther away to graze. "Nothing grows on the grazing land anymore and the grass closer to the dumpsite makes our cattle ill," Kantharia claims.

The mining work should have been stopped long ago

Prajapati and Bharat Jambucha, a well-known environmental activist and proponent of organic farming from the region, both point to blatant violations of environmental laws in the execution of mining work, with at least 12 violations cited by local officials. "But nothing happened after that. Mining work has continued without any hassles," Jambucha says. Among some glaring violations include the absence of a boundary wall around the dumping site and proper disposal of mining effluents.

The mining work has also continued without a most basic requirement – effluent treatment plant and sewage treatment plant at the mining site, Prajapati points out. "The mining work should have been stopped long ago. And the company should have been levied a heavy fine. But no such thing happened," he adds.

In some villages, the groundwater level has depleted over the past few years and villagers attribute it to the mining project. Women from Surkha village travel several kilometers outside for potable water. "This is new. Until five years ago, we had some water in the village and did not have to lug water every day," says Shilaben Kantharia.

The mine has affected the landscape around the villages

Sukanya Shantha/The Wire

Resisting lignite mining

The lignite mining project has a long history of resistance. Agricultural land, along with grazing land were acquired from the cluster of 12 adjoining villages in the coastal Ghogha taluka between 1994 and 1997. The locals estimate that villagers here lost anything between 40-100% of their land to the project. "We were paid a standard Rs 40,000 per bigha," Narendra, a local photographer, says.

The money, Narendra says, felt decent in 1994 but for those who had been dependent on this land, the years to come proved very challenging. "Several villagers have now taken a small patch of land in the neighboring villages on lease and are cultivating cotton and groundnut there," Narendra says.

They were dependent on others' land for work.

Bharat Jambucha says things get further complicated for the communities which were historically landless. "Most families belonging to the Dalit or other marginalized populations in the region never owned any land. They were dependent on others' land for work. Once villagers lost their land to the project, the landless were pushed out of the village," he adds. His organization, Prakrutik Kheti Juth, has been at the forefront, fighting for the rights of the villages affected in the lignite mining project.

In 2017, when the mining project finally took off, villagers from across 12 villages protested. The demonstration was disrupted after police used force and beat many protesters. More than 350 of them were booked for rioting.

The villagers, however, did not give up. Protests and hunger strikes have continued from time to time. A few villagers even sent a letter to the President of India threatening that they would commit suicide if the government did not return their land.

"We let them have our land for over 20 years," says Gohil.

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