Demonetization is the process of stripping a currency from general usage, or circulation. This is usually done whenever there is a change of national currency or replacing the old unit with the new one. A similar step was taken when the European Monetary Union nations decided to adopt Euro as their currency. The old currencies were allowed to convert into Euros for a period of time allocated, in order to ensure a smooth transition through demonetization. Zimbabwe, Fiji, Singapore and Philippines are the other countries who have opted for demonetization.
Demonetization is one of the boldest movements taken by Government of India under the leadership of our Hon. Prime minister, Sri Narendra Modi in the history of Indian economy which came into effect from November 8, 2016 midnight. The idea behind this move of demonetization was to declare Rs 500 and Rs 1,000 notes will be no longer legal tender. The aim is to curb the corruption and get into lawful, banked and taxable part of economy.
According to the RBIs database on the Indian economy
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This move helped in eradication of black money. With this move black money holders either have to show their income source from which they earned their black money to the department or to burn the stacked income. RBI data shows that in 2015-16; almost 6.5 lakhs counterfeit notes were detected in commercial banks of which almost 4 lakhs were in the Rs 500 and Rs 1,000 category. Apart from that it also helped in curbing of counterfeit currencies. This initiative will help to fight against counterfeit currencies that are being used for financing terrorism activities.
It should be noted that only a small portion of black money is actually stored in the form of cash. Most of the black income is kept in the form of physical assets like gold, land, buildings etc. Hence demonetization can help in curbing only the amount held in hand in form of
The death of the penny would have ended there but with the government realizing that they weren't worth minting and happy that its people were removing they became circulation which according to google means that “movement to and from or around
Paper money that was issued by the colonial government was a concern. Certain paper money could only be used for paying public debts, including military supplies or taxe...
...price and devaluation of the domestic currency to bring it back to A from A’ the country has to sell off its Foreign assets.
The rule of law, simply put, is a principle that no one is above the law. This means that there should be no leniency for a person because of peerage, sex, religion or financial standing. England and Wales do not have a written constitution therefore the Rule of Law, which along with the parliamentary Sovereignty was regarded by legal analyst A.C Dicey, as the pillars of the UK Constitution. The Rule of Law was said to be adopted as the “unwritten constitution of Great Britain”.
Zimbabwe overprint caused a currency spike of over 1,700%, resulting in “100 trillion banknotes”, this hyperinflation ultimately resulted in the abandonment of local currency. When a government overprints on purpose, it is called “Seigniorage.” Another example of how inflation can strike a country is through natural disasters or wars. Upon these instances, hyperinflation can take form due to governments spending crucial amounts while engaging in war or disaster relief. Once the damage has been done on the bill after these events, its hard for governments to repay the sum of money because they had to print more money to support the war or disaster then they had in the first place. Federal minimum wage is another factor of inflation. When the minimum wage increases in a country, any and all types of business are affected in one way or another, this is because the companies respond to the higher minimum wage by raising the prices of their goods and/or services to adjust for the inclining wage. A primary method to overpower inflation in economies would be the shock therapy method. The shock therapy method consists of multiple layers starting with ending price controls, the privatization of publicly owned entities and trade
Over the last ten years people in the United State and around the world have heavily relied more on their debit or credit cards to process transactions of their purchases. In the old days it used to be when you would get your paycheck on Friday and rush to the bank during your break or lunch in order to cash withdraw your funds or deposit them into your account. It used to be where you carry cash to buy groceries, pay bills, and go shopping. Now some people don’t even set foot inside their bank branch because they are paid using direct deposit or the funds are loaded into a debit card provided by their employer. Many employers from around the globe don’t even issue paper check anymore.
This “black money” along with illegal exports taint local economies and corrodes the financial structure in developing countries where organized crime has strongholds. Developing countries become the targets for such practises due to the ability for organised crime groups to manipulate the system in place to their benefit. A country’s tax system is an important economic feature that has a major impact on organized criminal activities. A financial environment in the country where tax evasion is prevalent is often accompanied by the higher levels of organized crime associated with the nature and scale of money laundering. Organised crime groups take advantage of an already weak system to benefit their own enterprises. Instead of being granted a chance to improve, developing countries’ financial systems are stemmed from achieving success due to the presence of malicious “black money” operations done by crime groups. A great deal of money traverses these illegal systems every year, and it put to use on more illicit trades, operations, etc. Consequently, “according to an estimate by the non-profit Global Financial Integrity group, $1 trillion vanishes from the developing world’s economies every year. That is money that is badly needed for development” (Indrawati). By taking the money from countries where the regulations are not as strict in turn squanders any chance that
Deflation is when the price level of general goods and services start to fall. At this point, the inflation rate at the economy will be a negative amount, as it has fallen below zero. This falling price level may seem like a positive thing as it technically increases the monetary value of the currency, and that means the currency goes further, but the negative effects outweigh this. The effects of deflation can lead to a higher unemployment rate, an increase in the value of debt, lower capital investments and an obscured customer demand. All theses signs lead to contracting and degrading economy. This will eventually lead to a liquidity trap and can cause some serious problems. The liquidity trap leads to a prediction that there very might well be a recession or depression in the near future. The efforts of a central bank are not enough to stimulate the economy and the interest rate will remain at zero or a very low level. With this information in hand, let’s take a look at each country.
basically lower the spending power of a currency and reduces the quantity of goods you
Money laundering is the routing of illegal profits from bank to bank to disguise its existence. The illegal profits are usually made through activities such as drug trafficking, prostitution rings, illegal arms sales, and various other things. Unfortunately money laundering is a serious crime that is still prevalent in the United States and other countries. The Russian mafia, the Triad or Chinese mafia, and the Columbian drug cartel are just a few of the groups that partake in money laundering. No one knows exactly how much money is laundered yearly but it is estimated to be about $100 billion in the United States. The United States is not the only country affected by these numbers. The estimated amount of laundering is 2% - 5% of the world’s GDP, between $600 billion and $1.5 trillion dollars annually. Although there are hundreds of ways in which to launder money, some are more lucrative than others. For example, the Black Market Peso exchange, gold, and digital cash are some of the more common ways to launder money. Making it harder to crack down on money laundering is the fact that many countries do not have money-laundering laws in place like the United States does. These other countries make it possible for this illegal activity to carry on, and are only hurting themselves because money laundering creates a direct negative effect on their economy. If these nations want to fight money laundering they will need to implement laws against it. Banks could be one of the most useful tools in stopping the laundering of money.
The invention of money was a major improvement in peoples’ lives. In the past, people usually had to travel all day to find the person who is willing to exchange their goods. In addition, the goods people want to exchange did not have the standard value of measurement. This led to unequal exchanges. Furthermore, it is not convenient to carry heavy goods from one place to another for an exchange. To solve these issues, money will be the only solution. Later, people tend to develop money from cowry shells to credit cards for the convenience and to improve their society.
The invention of money is perhaps one of the greatest achievements of human civilization. From the very beginning of society, people have used money to circumvent the difficulties of bartering and to foster trade and commerce. Since then, money has come a long way. No longer do we need to rely on silver coins, cocoa beans, or even anything of intrinsic value to conduct our business; today, we use paper currency, which is convenient and easy to carry around. But slowly, we are moving into the digital age of money, an age in which less of our money is actually tangible and more of it is just data on a computer server. To some, this prospect may seem daunting. However, given the major advantages of electronic money over outmoded paper counterpart, society as a whole should embrace the upcoming era of digital money.
...society, I will say that living in a cashless society is the way to go. Let work together to make this future dream a reality so that we can be proficient, competent, and capable in abating the crime in our society.
Today, couple of monetary forms are completely upheld by gold or silver. Subsequent to most world monetary standards are fiat cash, the cash supply could increment quickly for political reasons, bringing about inflation. The
A cashless society will further improve the globalisation that characterise our present time. The computerised systems can be used to decrease the quantity of paper trail therefore substituting paper cash with cashless credits or electronic money transfers. However, in a cashless economy, this will change with certain crimes almost eradicated. It will also be faster to generate electronic payments than cash as Near Field Communications (NFC) chips make their way into more payments cards and mobile handsets as well providing protection not applicable to purchases made using cash. This technology is simple with low power wireless link evolved from radio-frequency identification (RFID) tech that can transfer small amounts of data between two devices identifying us and our bank account to a computer. Another benefit of drawing nearer to a cashless society is that other companies are providing pioneering cash-free solutions to the payment related problems we come across. For example, WisePay, a provider of e-payments services, is deploying technologies that ensure parents no longer have to worry about sending their children to school with cash to pay for meals, excursions and other fees that will eliminate the likelihood of being caught short for cash or children misplacing money. The Government also has valuable explanations why they may deem to turn away from cash. Due the main factor of printing and distributing cash, not to mention ensuring the economy is free from forgeries which are all costly endeavours estimating that the cost to society of using cash is between 0.5 and 1.5% of GDP annually. In addition, there are many technological innovations that propose there is a real enthusiasm for an alternative to cash with the upsurge...