Demonetization is the demonstration of stripping a money unit of its status as legitimate currency. Demonetization is essential at whatever point there is a change of national money. The old unit of money must be resigned and replaced with another cash unit.
In 2016, the Indian government chose to demonetize the 500-and 1000-rupee takes note of, the two greatest category notes. These notes represented 86% of the nation’s money supply. The administration’s objective was to kill fake money, battle impose avoidance, dispense with black money gotten from government evasion and fear monger financing exercises, and advance a cashless economy. By making the higher denomination notes useless, people and elements with colossal totals of dark cash gotten from parallel money frameworks were compelled to change over the cash at a bank which is by law required to secure expense data from the element. In the event that the element couldn’t give evidence of making any duty installments on the money, an expense punishment of 200% of the assessment owed was forced.
There are numerous reasons why countries demonetize their nearby units of cash. A few reasons incorporate to battle expansion, to battle debasement, and to debilitate a money framework. The procedure of demonetization includes either presenting new notes or coins of a similar cash or totally supplanting the old money with new cash.
Here’s a video, which will put the whole aspect and concept of demonetization into perspective.