Essay on Demonetization for Students

Essay on Demonetization

Demonetization is the process of making a country’s currency invalid for use by the government. This means that the demonetized currency loses its legal tender value and cannot be used for future transactions. Demonetization is necessary whenever there is a change in the national currency. The old currency unit must be withdrawn and replaced with the new currency unit.

With demonetization, all cash has to be deposited in the bank, thereby improving the position of the banks and the economy positively. The practice of carrying cash has decreased, thus reducing corruption as all bribery and other illegal transactions are done in cash. Terrorism is stopped because terrorism mainly depends on fake currency.

The negative effects of demonetization can also be seen when a country demonetizes any currency. All the cash in that currency has to be deposited in the bank. So all the people who have the same currency have to go to the bank to deposit it. They have to live like collecting cash because there will be a crowd to collect cash even if they have very little cash. Printing/creating new currency will be a new burden on this economy and all demonetized currency will have to be destroyed.

In my opinion, all countries have to demonetize all major currencies in the economy after 20 to 30 years. It will have a positive impact on the economy by reducing the practice of corruption, terrorism, fake currency, black money, etc, Like India has recently demonetized 500 and 1000 notes.

The total value of these two notes in the Indian economy was about 85% of the total currency. The Indian government took this decision to curb corruption, terrorism, fake currency, and black money and promote online transactions.

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