Demonetization is the act of stripping a currency unit of its status as legal tender. It occurs whenever there is a change in national currency. It involves the withdrawal of the current form of money from being circulated usually replaced with new notes or coins. It can help in bringing stability to the existing problems or may cause chaos in an economy if it goes wrong. The move can negatively impact the economy, especially when introduced abruptly without warning. Demonetization is taken up by countries for various reasons such as; to stabilise the currency and fight inflation, to promote trade and access to markets and to bring transparency in informal economic activities, away from black and grey markets. Demonetisation was tried as a tool to modernise a developing economy that is cash-dependent and to fight crime and corruption involving counterfeiting and tax evasion. Accordingly, the Indian government demonetised the Rs 500 and Rs 1000 face-valued currency notes in 2016, the two most prominent denominations in its currency system. After a currency has been discontinued, it is no longer legal tender and contains no monetary value.

Sahreen Younis Ahanger

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