, processing, marketing, distribution, rural electrification, housing, construction and provision of essential amenities for local communities. even in the medium and large industries and transport sectors, an increasing range of activities could be undertaken on cooperative lines. ” 18. over the years, the importance of cooperatives increased well beyond a business form to a more broad based development philosophy to fulfil the common economic aspirations of the poor and disadvantaged. this narrative suggests that growing state faith played a critical role in evolution of cooperatives. cooperatives also driven by the land holding pattern 19. in addition to state policy, the changing pattern of landholding in india aided the spread of cooperatives. bis central bankers ’ speeches 20. during the 50s and 60s, more than a fourth of the total cultivable land was held by large farmers. by the year 1995 – 96, this picture changed significantly with large farms yielding ground to small and marginal farms whose share increased both by way of number of operational holdings as well as operational area. as per the latest agricultural census ( 2005 – 06 ), small and marginal farmers, having less than 2 hectares of land, accounted for 83 per cent of the total number of operational holdings and 41 per cent of the operated area. it is this class of “ small ” farmers, operating at the margins – socially as well as financially, with low income base and limited market orientation, vulnerable to climate changes and facing considerable risk in their agricultural operations – that define the profile of the clientele of cooperatives. the average size of loans disbursed by the cooperatives works out to about 30, 000, as against 1, 38, 000 disbursed by the commercial banks ( 2010 ). the difference evidences the nature of the cooperatives and their clients. still they seem to be losing out – problems in the rural cooperative credit system 21. as indicated above, the cooperative movement in india has had the support of state policy and also the landholding pattern. yet, cooperatives seem to be losing out on business share. the market share of rural cooperative banks in india has been continually receding – from 7. 2 per cent in 2001 to 3. 7 per cent in 20102. if the share of cooperatives declines further, they may lose their role as an important player in rural credit. this raises an important policy question. can a process such as the cooperatives be driven entirely as a top down process? isn ’ t bottom up support a necessary condition for the

sometimes garners large headlines. but from the standpoint of analysis, the “ currency ” or asset at the center of some of these systems is not backed by other secure assets, has no intrinsic value, is not the liability of a regulated banking institution, and in leading cases, is not the liability of any institution at all. indeed, how to treat and define this new asset is complicated. 3 while these digital currencies may not pose major concerns at their current levels of use, more serious financial stability issues may result if they achieve wide - scale usage. risk management can act as a mitigant, but if the central asset in a payment system cannot be predictably redeemed for the u. s. dollar at a stable exchange rate in times of adversity, the resulting price risk and potential liquidity and credit risk pose a large challenge for the system. during times of crisis, the demand for liquidity can increase significantly, including the demand for the central asset used in settling payments. even private - sector banks and certainly non - banks can have a hard time meeting large - scale demands for extra liquidity at the very time when their balance sheets may be in question. moreover, this inability to meet the demand for extra liquidity can have spillover effects to other areas of the financial system. earlier in our history, the united states frequently witnessed bank runs that severely disrupted financial and economic activity, an example of what can happen when people lose faith in a payment system. in response, congress ultimately introduced both a central bank and deposit insurance programs to help regulate fluctuations in the supply of liquidity in order to keep prices stable. without the backing of a central bank asset and institutional support, it is not clear how a private digital currency at the center of a large - scale payment system would behave, or whether the payment system would be able to function, in times of stress. 3 / 5 bis central bankers'speeches central - bank - issued digital currency given that privately developed digital currencies may raise important financial stability issues tied to the value of the asset, some have argued that central banks should begin to issue their own digital currency as a 21st century analogue to paper currency. i would urge caution, particularly for countries like the united states with highly developed banking systems and ongoing robust demand for physical cash. as a practical matter, i believe that consideration of a central - bank - issued digital currency to the general public would require extensive reviews and consultations about legal issues, as