As Prime Minister Dinesh Gunawardena explained in his series of discussions with foreign envoys who called on him to congratulate him, Sri Lanka is in an unprecedented economic crisis and looking for assistance from international fiscal institutions and friendly countries for debt-restructuring and economic recovery.
For the first time, the country has reached its historic peak on international media as well as one of the hottest keywords on all sorts of social apps, as a nation on the brink of economic collapse.
One of the ideas the Central Bank is examining for a quick recovery from the unprecedented foreign exchange reserves crisis is to make Sri Lanka a hub of international digital currency exchange. The powerful economies in the world prefer neutral venues for currency exchanges for trade among themselves to prevent the currency value fluctuations that could harm their individual currencies.
The U.S. and China are the world’s No.1 and No.2 economic powerhouses. China and India are the two largest economies among developing countries. To form an inclusive cooperative framework which can have the three countries to come on board will be a promising and encouraging scenario for the global South. Based on its unique geopolitical, diplomatic, economic and historic relationship with all three countries, Sri Lanka has the full potential to realise this vision.
The recently set up ‘Organisation on Developing Countries Revitalisation (ODER)’ has plans to bring the USA, China and India to come on board through Public – Private – People – Partnership (PPPP) mechanism with the Secretariat to be established in Colombo.
ODER will set up Pilot Special Digital Economic Zone (SDEZ) in five regions to be linked to the Centre in Colombo. They are South India, Sri Lanka, the Maldives (SIDM), the China – Pakistan Economic Corridor (COPE), Bangladesh – China – India – Myanmar Corridor (BCIM) and Mekong River region including: Myanmar, Thailand, Laos, Cambodia, Vietnam (MTLCV).
One of the pioneers of ODER, Liu Yang Sloan said, as a Digital Economy will be the pillar mechanism for developing countries to achieve socio-economic revival in the post-Covid19 and Post-Ukraine War period, ODER is currently casting the ‘Digital Exchange on Developing Countries (DEDC)’ with the operational centre in Sri Lanka, amidst offering a revolutionary economic development mechanism for worldwide developing countries with the change-of-destiny of Sri Lanka as a vivid case study for all.
Sloan added that 2023 will be the 10th year anniversary of the ‘Belt & Road Initiative’(BRI) which is focusing on boosting cooperation among developing countries, initiated by Chinese President Xi Jinping in September and November 2013 during his state visit to Kazakhstan and Indonesia respectively. Thanks to BRI, trade figures between the developing countries and China have reached 2,138.766 billion USD in 2021. The initial target is to allocate 10% of this value to be traded through DEDC, based on which, an innovative Digital Assets Exchange shall be incubated to link the IMF SDR Fiat Currencies (USD, EUR, CNY, GBP, JPY) related trade and investment directly to grass-root economic activities in the developing countries in the forms of Central Bank Digital Currency (CBDC) and National Stable Coin (Stable ODER).
Future of money
In February 2022, IMF Managing Director Kristalina Georgieva initiated gearing up for CBDC as the Future of Money during her keynote speech in Washington DC. In March 2022, U.S President John Biden had signed the executive order on Ensuring Responsible Development on Digital Assets. In May 2022, President Biden had signed two executive orders for Quantum Technology. These are some critical international background for the future development of DEDC.
According to ODER Spokesman, as the initiator and operational centre of DEDC, Sri Lanka has the possibility to create innovative and emerging revenue channels to reach as high as 90.95 Billion USD income under the categories of International Trade Commission and Profits, IT Service Charges, R&D Service Charges etc. by the end of 2025.
Even if Sri Lanka could earn a small portion of the projected income as commissions, which would be a tremendous relief to the foreign exchange shortage faced by the country. Hence, it is of high importance for the currency and fiscal authorities including the Central Bank to look into the financial viability of the proposed digital currency exchange centre.
By Sugeeswara Senadhira