GOLD BACKED DIGITAL CURRENCY

Idea is 

          "Govt launches Digital Currency backed by gold which will coexist with the fiat currency, whose 1 unit value is equal to 1gm of gold, It can be stored as an investment in a Digital wallet, and also can be used as a Currency with its integration with UPI, and also can be traded on the stock exchange as any other ETF, and also these units can be used to get loan just like physical gold."

Benefit to People:

1) Keeping physical gold safe is a headache, and this GBDC provides an alternative investment avenue for people with the same benefits as physical gold.

2) Currency loses value to inflation, but with GBDC, there is no such risk, as one unit of GBDC is linked to one gram of gold, and Gold is the best protection against Inflation.

3) Makes it easy to buy and is relatively cheaper compared to buying physical gold. For eg, Goldsmith charges 4% of the Gold value as the making/dye charges for 24-carat gold coins; there will be no such charges for buying GBDC.

4) With an increase in gold value, the buying price of the people increases. So people can accumulate gold over the years and build their homes, buy better cars with ease, instead of taking costly loans and spending their lives paying back EMIs. In other words, GBDC provides an organic alternative to loans. 

Let us assume I took a loan of 25 lakhs in the year 2015 to buy a home, the EMI for the loan at 6.90% for 10 years is 28898 per month. The property at the end of 10 years would cost me 65 Lakhs(considering avg. CAGR in real estate in Hyderabad), but buying the gold, just as EMI would bring me a value of 1Crore after 10 years, still leaving 35 lakhs for spending. With this, I will either go for an even better option or buy a car + home. 

Benefit to the Government:

1) GBDC can be both stored and traded. When stored in a Digital wallet, it would bring in 0.01% of the Avg. Gold value as a storage charge per month, for eg., saving 10lakh rupees as GBDC will bring in 1200rs as storage charges per year. When traded, it brings both Security transaction charges and capital gains for the Government. (The capital gains must be reduced to 3% on GBDC to make it the best investment option for citizens).

Just from the above case of buying a house, a citizen can have a net benefit of 33.68 Lakhs as shown above, and the Government gets 3.59 Lakhs as taxes. These taxes can be used further to buy gold as a reserve for issuing new GBDC.

It is a sustainable way of growth for both the Government and the Citizens.

2. When transferred through UPI to another person's digital wallet, a transfer fee of 0.1% can be charged. Through the Transactions, the government can make a lot of money. Currently avg. Transfers through UPI per month are 25lakh crores and transfer fees can bring in 2500 crores every month. If it is madated that if all the transaction above the value of 50K are through the GBDC, then that would bring a lot of benifit to govt and relief to tax payers.

3. It must be mandated that any transactions more than 1Lakh must be made only through GBDC and all the fiat currency above 50rs should be demonetized. This will reduce black money to some extent. Distribution of money during elections, buying land of worth 1crore for 30Lakh white money and 70 Lakh black money with 50rs notes is very difficult.

4. Government in the view of the recent trump tariffs can buy a lot of gold to decrease the rupee value, which can still make our exports cheap and relatively competitive and at the same time our government and its people will become asset rich.

Implementing GBDC is an overall win-win situation for both the government and the people and then why not implement it.