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Last updated 18 Jun 2017

De-monetisation is a process of replacing some or all of the physical stock of notes in an economy

  • De-monetisation can be achieved more rapidly by phasing out high denomination notes (HDNs)
  • Contactless payments and digital wallets are increasing the speed & convenience of settling payments using bank deposits
  • A number of central banks, including the ECB, the Bank of Canada and the Monetary Authority of Singapore have announced plans to phase out their HDNs
  • Ken Rogoff in “The Curse of Cash” argues that the USA’s Federal Reserve should stop printing new $100 bills
  • In the UK, the highest denomination note is a £50 note; the 70bn stock of notes is equivalent to over £1,000 per head
  • In November 2016, the Indian government under Prime Minister Modi announced a surprise de-monetisation policy

De-monetisation of the Indian economy

In November 2016 the Indian government de-monetized 500 and 1,000 rupee notes and introduced new Rs 500 and Rs 2000 notes. This made 86% of cash in circulation in the Indian economy invalid


  1. Curb corruption, counterfeiting, funding for terrorism
  2. Increase tax compliance and increase tax revenues
  3. Stimulate digitalisation of economy
  4. Increase flow of savings into formal financial accounts
  • E-commerce
  • Banking industries
  • Financial technology
  • Agriculture
  • Luxury goods (SUVs, gems, jewellry)
  • Real estate
  • Traditional retail (roadside vendors, cab drivers)

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