International Computer Magazine
| Economic Emergencies worldwide |
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Governments across the world have decided to ban currency notes in circulation, rendering huge amounts of cash useless overnight, due to a plethora of reasons. These include fighting counterfeiting, stopping terror activities or like in India’s case, battling black money. To check black money, Govt of India, announced demonetization of Rs 500 and 1000 currency notes. This move will also cause short-term pain and chaos for the working class. Black money, ie., the unaccounted money, often used in any form of corruption or illicit deals, usually takes the |
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form of high-value notes. These large-value notes were being used to finance corruption and fund terrorism. Different countries have also shifted to new bank notes due to a change in government, social change and hyper-inflation.It has, for the past five years, been proposed by a number of academic institutions, think-tanks and international bodies that look to crack down on tax evasion, corruption and terrorism-financing. To deter counterfeiting, Switzerland has a reserve series of notes. A series of Swiss Franc 10 notes were printed by the Swiss National Bank in 1984.But the notes were never issued and the notes are currently still in reserve. Last year Philippines also introduced the country’s new generation Bank notes to avoid counter feting. In February this year, European Central Bank head Mario Draghi announced that they were considering abolishing the region’s most-valuable bank note (the 500 euro bill) in order to curb tax evasion and terrorism financing. In India, The present bank notes have been in circulation for 30 years. Old bank notes can only be used for transactions until December this year, and could only be replaced by banks until December 2016. The Financial Action Task Force, a global body that looks at the criminal use of the international financial system, notes that high-value bills are used in money laundering schemes, racketeering, |
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and drug and people trafficking. In India, the Rs 500 and Rs 1,000 notes also constitute a huge percentage of the money spent by governments, political parties and candidates during general elections. A Centre for Media Studies report showed that nearly Rs 30,000 crore was spent during the 2014 general election, while official spending only accounted for Rs 7,000-Rs 8,000 crore. Peter Sands, a senior fellow at Harvard University’s Kennedy School of Government, in recent times, has done some interesting work regarding banning large-value notes as a means of cracking down on global crime and corruption. Some notable examples are Zimbabwe, Australia and Pakistan. Due to chronic hyperinflation in Zimbabwe, the government was at one point printing a currency note with a face value of one hundred trillion dollars. This obviously rendered lesser denominations obsolete, which were taken out of circulation quickly. In 1996, Australia became the first country to have a full series of circulating polymer bank notes after replacing all paper-based notes, which the government systemically made non-tender for legal purposes. To stop widespread counterfeiting, the Reserve Bank of Australia had released the world's first long lasting and counterfeit-resistant polymer (plastic) banknotes. Pakistan has decided to phase out all currency notes with old designs. From December 1, all currency notes across denominations will cease to be legal tender in Pakistan. Islamabad has been trying to bring in new designs and security features to its currency. However, its citizens have nearly a a year and half to exchange notes. The country had earlier |
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