E Currency and Central Banks

E currency cannot make Central Banks powerless provided their information system to capture the money supply is sound enough. The data integrity and the speed with which the information flows to Central Banks are fool proof, the e currency will only enhance the efficiency of Central Banks. The payment and settlement system if well regulated and captured by the Central Bank without any leakage, the monetary control mechanism can be made more effective and meaningful. In India, the problem is, it is cash oriented economy and mixing of black money takes away the Central Banks monetary transmission mechanism. The simultaneous existence of formal economy and informal economy renders it difficult to assess the money supply position for the Centrals Banks, where as, if there is only e currency, the Central Banks can have an improved mechanism to pursue their policies in a much better way.

Dr.T.V.Gopalakrishnan
(This comment appeared in Times of India against the Article E currency can make Central Banks Powerless)