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Insights Daily Current Events, 12 November 2015

Insights Daily Current Events, 12 November 2015

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Paper 2 Topic: Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.

Yuan ticks IMF boxes for reserve currency

International Monetary Fund representatives have given China strong signals that the yuan is likely to soon join IMF’s basket of reserve currencies, known as Special Drawing Rights.

  • China has ticked most of the boxes set by the International Monetary Fund (IMF) to grant the yuan reserve-currency status.
  • For a currency to be included, it must assume an important role in global trade and needs to be “freely usable.”

Background:

  • China has been seeking to join the Special Drawing Rights basket as part of a campaign to play a larger role in the postwar global economic order dominated by the U.S. and Europe.
  • Membership of the IMF club would be a crowning achievement after three decades of breakneck growth that saw the Chinese economy take its place as the world’s second-largest after the U.S.

Why should the yuan be included?

  • Global use of the yuan has surged since the IMF rejected SDR inclusion in the last review in 2010.
  • Now, the currency has become the fourth most-used in global payments with a 2.79% share, surpassing the yen.

About SDR:

  • IMF created the SDR in 1969 to boost global liquidity as the Bretton Woods system of fixed exchange rates unraveled.
  • SDR is not technically a currency. It gives IMF member countries the right to obtain any of the currencies in the basket — currently the dollar, euro, yen and pound — to meet balance-of-payments needs.
  • Holders of SDRs can obtain the above mentioned currencies in exchange for their SDRs in two ways: first, through the arrangement of voluntary exchanges between members; and second, by the IMF designating members with strong external positions to purchase SDRs from members with weak external positions.
  • In addition to its role as a supplementary reserve asset, the SDR serves as the unit of account of the IMF and some other international organizations.

Review:

  • The basket composition is reviewed every five years by the Executive Board of the IMF, or earlier if the IMF finds changed circumstances warrant an earlier review, to ensure that it reflects the relative importance of currencies in the world’s trading and financial systems.

sources: et, imf, wiki.

 

Paper 3 Topic: Science and Technology- developments and their applications and effects in everyday life.

Trai Asks Operators to Add Towers to Address Call Drop Issue

The Telecom Regulatory Authority of India (Trai) has asked the telecom operators to add more towers to address call drop issues.

What has TRAI suggested?

  • TRAI has suggested that measures such as Dynamic Channel Allocation, multiple call routing and optimised resource management can be employed by the Telecom Service Providers (TSPs), besides usage of mobile signal boosters at the users’ buildings or premises.
  • TRAI has also asked the authorities to adequately address problems like removal of towers from certain areas.

Recent studies have shown that call drops are more evident in urban areas. With the increase in the usage of 3G networks, the growth rate of mobile towers supporting 2G networks has reduced.

What is a call drop?

A call drop has been defined as “a voice call, which after being successfully established, is interrupted prior to its normal completion (and) the cause of early termination is within the network of the service provider”.

About TRAI:

  • It is the independent regulator of the telecommunications business in India.
  • It was established in 1997 by an Act of Parliament to regulate telecom services and tariffs in India.
  • In January 2000, TRAI act was amended to establish the Telecom Disputes Settlement Appellate Tribunal (TDSAT) to take over the adjudicatory functions of the TRAI.
  • The TDSAT was set up to resolve any dispute between a licencor and a licensee, between two or more service providers, between a service provider and a group of consumers. In addition, any direction, TRAI orders or decisions can be challenged by appealing to TDSAT.

sources: the hindu, trai.