Demonetization: A tool to curb black money, corruption and terrorismDemonetization is defined as “ an act of stripping a currency unit of its statuses as legaltender” (Mali, 2016). Through demonetization circulation of obsolete currency is barred byintroduction of new currency. Generally demonetization has been utilized as a tool to combatissues associated with inflation by reinforcing or re-establishing the value of a subjectcurrency and, as a vehicle to assist progression of trade and access to markets. Further, inmost of the scenarios demonetization is carried out to translate illegitimate economicproceedings into legal and more transparent activities and primarily to eliminate flow ofblack money ensuing from underground businesses which also includes terrorist financingactivities. In addition, it is also used as a tool to combat corruption and promote cashlesstransactions through digitization drive. Despite its objective and purpose, demonetizationimpacts the economy of a country in a tremendous manner as the intervention directly affectsthe medium of exchange that is being employed in all kinds of economic transactions.Unsuccessful demonetization move can result in chronic societal turmoil and decline ineconomy. The history of demonetization dates back to 1990s and to underpin the failing economynumerous countries have implemented the demonetization move. While some nations haveenjoyed the success of the demonetization move, few countries were overshadowed by thechaos resulting from demonetization drive. To ensure uniformity in currency, in 1971, Britainintroduced coins of 5 and 10 pounds and this act of demonetization had only a minute impacton the economy as the government gave adequate time to the people to exchange theirmoney. Similarly, during 1996, with the objective to check black money and widespreadcounterfeiting, paper-based notes were replaced with polymer bank notes of the samedenomination in Australia. The move didn’t have any adverse effects but helped in turningAustralia into a business-centric country. In contrast, demonetization of 50 cedi has resultedin nationwide chaotic situations and in 2010, North Korea implemented demonetization and itultimately led to immense economy downturn with the people left deprived of basic needs(K, 2018). Black money refers to any income generated from illegal or underground business and itwould also encompass the legitimate income which are hidden from the eyes of publicauthorities basically to evade taxation (Solaiman, 2014). According to Swiss Bank statistics
of 2011, it was brought to the notice that a tremendous amount of black money is depositedwith them wherein India tops the list with approximately $1500 billion followed by Russiawith $470 billion (Ramdurg and Basavaraj, 2016).