What are the advantages of demonetisation?
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Advantages of demonetisation: Below are some of the key advantages that are often associated with demonetisation.
- Getting fake currency out of circulation: Demonetisation 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.
- Controlling inflation: Demonetisation can control inflation by taking certain notes out of circulation can help the government to control public spending.
- Tax Collection: Money deposited in the bank during demonetisation can be taxed especially if the affected parties were trying to evade taxation by keeping hard cash.
- 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 demonetisation is that it will help to propel us into the future.
- Improved deposits and savings in financial institutions: Parallel economies make it difficult for banks and other financial institutions to raise deposits. Demonetisation reduces the size of the parallel economy and boosts savings and deposits.
- Stopping fraudsters: When a new currency is introduced, this can also be a great opportunity to halt the activities of fraudsters who had been making money illegally by counterfeiting coins and notes.
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