Question

Give 5 advantages of demonetisation

Answer 1

1.Getting fake currency out of circulation:- Demonetization can also be used to get fake currency out of circulation in a country’s economy since such currencies cannot be deposited in banks and other financial institutions.

2.Controlling inflation:-Demonetization is usually cited as having one key advantage: this is that it can control inflation. Taking certain notes out of circulation can help the government to control public spending.

3.Tax Collection:- Money deposited in the bank during demonetization can be taxed especially if the affected parties were trying to evade taxation by keeping hard cash.

4.The move to digital currency:-Some commentators argue that in the future, we will all be using digital currency, such as bitcoins. If this is true, then one advantage of demonetization is that it will help to propel us into the future.

5.improved deposits and savings in financial institutions:- Parallel economies make it difficult for banks and other financial institutions to raise deposits. Demonetization reduces the size of the parallel economy and boosts savings and deposits.