Narendra Modi, India’s prime minister, announced to quit 500 and 1,000 rupee notes, all at sudden.
According to the official comment, these notes have been no more available since Nov. 9th. It was just four hours after the statement. Instead, the government will launch new 500 and 2,000 rupee notes within a few weeks. Citizens have to exchange the issued notes they possess.
Unsurprisingly, this policy brought a chaotic situation to Indian society. Banks, post offices, and petrol stations encountered deadly crowd composed of people asking the exchange.
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It is obvious that Modi took a ridiculous way to replace notes in the country. In general, when the government replaces notes of coins, at least some months of the moratorium in which both old and new items are available.
Why Modi adopted such an extreme policy is still unclear. It is said that Indian people are fond of stocking notes for the future. It makes difficult for the government to grab each citizen’s financial situation. Considering the fact that only a few percent of citizens pay the income tax, there seem considerable cases of concealed income and tax evasion. Modi is likely to force citizens to deposit their estate.
Another possibility is counterfeit money. If criminal groups are engaging in creating a large amount of fake money, radical replacement of valid notes and coins is useful to prevent the act of such criminals. But, I have no idea of this hypothesis.
Anyway, Indian rupee lost public trust.. Immediately after the government declares so, notes became to waists. And this incident has reminded us the Indian government has a considerable risk of damaging domestic currency.
Bitcoin, a representative crypt-currency is free of such political risk. Bitcoin is administered by a decentralized system. There is no responsible person for issuing Bitcoin. It means nobody can eliminate Bitcoin itself.