Legal Definitions - demonetization

Definition: Demonetization refers to the act of withdrawing the status of legal tender from a currency unit or ceasing to use a particular metal as money.

Example: In 2016, the Indian government demonetized all ₹500 and ₹1,000 banknotes, which accounted for 86% of the country's cash in circulation. This move was aimed at curbing corruption, black money, and counterfeit currency.

Explanation: The example illustrates how demonetization involves the discontinuation of a particular currency unit as a legal tender. In this case, the Indian government withdrew the status of legal tender from ₹500 and ₹1,000 banknotes, rendering them useless for transactions. This move aimed to tackle issues such as corruption, black money, and counterfeit currency, which were prevalent in the country's economy.