Can digital cash lift gross national happiness?

The tiny Himalayan kingdom of Bhutan, landlocked between the teeming multitudes of China and India, shot to global fame in the 1970s with gross national happiness: a broad measure of overall welfare it prefers over the more traditional metric of gross domestic product, which only includes production of goods and services, even those that ultimately leave us miserable.
More recently, the hydroelectric-powered nation decided to become not just carbon neutral — but carbon negative, its pristine forests acting as a sink-hole to absorb the greenhouse gases released by its coal-burning neighbours.
And now Bhutan wants a digital currency.
Will a new payment instrument make the 800,000-strong, mostly Buddhist society happier than it already is? Well, it might.
Cash is a relatively new construct in Bhutan. Up until the 1950s, the people were still bartering in rice, butter, cheese, meat, wool, and hand-woven cloth. Even civil servants accepted their pay in commodities. Seven decades later, the Royal Monetary Authority has announced a pilot with San Francisco-based Ripple for a national currency running on distributed electronic account-keeping.
The open-source XRP ledger claims to be carbon neutral and 120,000 times more efficient than proof-of-work blockchains. Unlike El Salvador, which has chosen to use the volatile and energy-guzzling Bitcoin as money alongside US dollars, Bhutan wants to retain the ngultrum, the national currency. The bet is that a paperless version of the central bank’s liabilities would be a more attractive alternative to bank deposits for a sparse population scattered across a rugged, mountainous terrain.
Big gains are expected from the monetary authority making its IOUs available to the public directly, as electronic cash that can be spent or saved without requiring a commercial bank in the middle. The goal of 85% financial inclusion by 2023 is a substantial jump over the 67% of adult Bhutanese who have bank accounts. Only a fifth of the population has any credit facility.
Bhutan is moving to test wholesale, retail and cross-border applications of its central bank’s tokens, even as advanced nations are still debating their utility. The Federal Reserve is yet to make up its mind; research that will reveal its assessments of the pros and the cons of a digital dollar is eagerly awaited around the world. Among larger economies, China’s e-CNY plans are the most advanced.
That creates a bit of a problem for the government in Thimphu, the Bhutanese capital.

—Bloomberg