Why do countries demonetise their currencies?


Demonetisation is the process of discontinuing
the value of current currency unit and instead introducing a new currency unit into circulation. Nigeria, Ghana, Pakistan, Zimbabwe, North
Korea, Soviet union, Australia, India, Phillipines are some countries which have tried demonetisation
earlier. The recent one being India. The government of India took an abrupt step
of demonetising rs. 500 and rs. 1000 currency bank. So why do countries demonetise their currency? Let’s find out: To understand demonetisation better, let’s
look at its advantages and disadvantages: Number one : Strike on black money hoarders:
Well, countries like Australia, North Korea, Nigeria, India demonetised their currency
to fight black money hoarders and organisations which counterfeit and circulate fake currencies. in layman’s terms as soon as the government
declares that they have demonetised their currency unit, people who stack illegal money
are left with only 2 choices, either to come forward and pay the fines imposed by the government
or to cry alone in the corner and use those stacked bank notes as tissue papers. Number two : Strike on fake currencies:
There are evil organisations running inside countries whose sole purpose is to circulate
and create a network of fake currencies. These fake bank notes are then used for funding
and carrying out terror activities. So when country demonetises its currency and
replaces it with new ones, all printed fake money will become useless, which will further
dismantle the fake currency network. Number three: Boost to the economy/ Lifestyle
When a country demonetises a currency unit, people start disclosing their income. As old currency notes become useless, and
to replace it with new ones’ people start depositing their money in their bank accounts. This has two benefits. As more money gets deposited in the bank,
the bank becomes rich and thus becomes capable of lending money for new business and entrepreneurs. These businesses earn income and deposit it
in the bank again, which further becomes more capable to loan money to new businesses. This cycle continues, thereby increasing the
ease of doing business and gives a slight boost to the economy. Government starts getting a huge chunk of
tax revenue, as people rush for replacing their demonetised currency unit. This tax revenue can be used by the government
for improving the infrastructure, roadways and living conditions of the society. Well everything sounds perfect until now,
but demonetisation has its disadvantages. People living in rural areas mostly farmers,
daily wage earners who don’t use credit or debit cards frequently are affected the
most. Since all their savings are in cash, which
are rendered useless after demonetisation, they have to stand in long queues for exchanging
them in bank. Thus crop production declines and daily wage
earners become jobless. The worst of the worst situation will arise
when these confused affected people, to get rid of demonetised currency take law and order
in their hands. This will further escalate the already chaotic
situation. Well this all can be prevented if demonetisation
is executed properly. It all depends on how government uses their
knowledge and power, and how people react and support government’s regime. Actually I think demonetisation is only a
temporary solution to black money and corruption. Demonetisation is not a permanent solution. A country with a strong and unbiased anti-corruption
department is more than enough to fight these issues. What do you think can demonetisation bring
an end to black money and corruption? Do share your views in the comment box below. Stay happy stay curious.

29 thoughts on “Why do countries demonetise their currencies?

  1. Great video as always friend. I really like how much effort you put into the animations that go along with what you're saying.

  2. i think demonetization is not the permanent solution but is a milestone while fighting against black money if the government has planned well to take advantage of taking this step and thus help maintain the economy clean…

  3. not true in case of india. Entrepreneurs don't give back to banks. They just give some part of it to politicians who in turn settle their debts from govt tijori. Fuking thug indians. 90% are corrupt shit.

  4. you showed that Pakistan has demonetised its currency that too in 2016,but it is false there is no sign of such thing media or wikipedia…..pls correct it if possible

  5. There are a lot of Indians here in Canada worried about this because they wont let them change their money by mail and so any cash they have they cant replace.

  6. Well explained guys. But standing in the queues seems naive disadvantage to me.

    Just considering the fact the people forming serpentine queues to buy movie tickets and even for Jio Sims in India, Can't the wait wait to get their money exchanged? (which is good for himself and the country)

  7. Hey man. You always explain stuff so clearly, so I can understand it very well. Could you please make a video in the future about "how do hot springs work"? I know the rocks in the earth's crust heat up the water, but that is all. Thank you.

  8. When ur channel get big, pls pay people to speak in your videos instead of you, not many ppl like your voice or accent, sorry bro but that's the truth and I am being honest with you so you can get more views

  9. Love your animation but can't understand your accent. I assume it's a hybrid accent. I can never use CC either. Love the animation though

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