•Theact of stripping a currency unit of its status as legal

tender

•The current form of currency is pulled and retired

•Replaced with new notes and coins

•TheCoinage Act of 1873 demonetized silver as legal
tender in favor fully adopting gold standard

•EU officially began to use euro as their currencies in

2002 (replace German marc, French franc and Italian
lira)

•In2015 Zimbabwean Govt demonetized its dollar to

control country hyper inflation which was 231000,000%
•To control inflation

•To discourage cash dependent economy

•Tocombat corruption and crime ( counterfeiting, tax

evasion)

•To facilitate trade

•On November 8, 2016, the Indian Govt declared that 500
and 1000 rupee notes will be stripped of their status as
legal tender

•New currency of 500 and 2000 notes

•Aim was to root out counterfeit currency, tax evasion,

eliminate black money, and to promote cashless
economy
•On GDP: The GDP growth rate of 8.01% in 2015-16 fell to 7.011% in 2016-17

•On daily wage workers: Use cash to meet all their expenses and many of them lost their
job. According to CPHS 1.5 million lost their jobs due to unavailability of cash ( 406.5
million to 405 million)

•On small scale industries: Work on the basis of liquidity preference

•On black money

•On general economic situation

•On political parties: Use undeclared cash
•Towards digital economy: Using cheques and account transfer