2 yrs af­ter note ban, cur­rency’s share in money sup­ply back to square one


the econ­omy.

De­mon­e­ti­za­tion led to a sharp plunge in this met­ric and cur­rency with the pub­lic plum­meted to a mere 6.55% of M3 by De­cem­ber 2016 as the en­tire na­tion was made to queue up to sur­ren­der their old high-de­nom­i­na­tion cur­rency notes.

Two years later, as of 12 Oc­to­ber 2018, the cur­rency with the pub­lic/ M3 met­ric stood at 12.99%. That is still well be­low the level at the end of Oc­to­ber 2016. So, could we say that the whole ex­er­cise was some­thing of a suc­cess, some gain at the end of all that pain? Not re­ally.

The cur­rency with the pub­lic/m3 yard­stick is now around the level it was at in Oc­to­ber 2015. In­deed, at end-oc­to­ber 2014 it was 12.85%, as the ac­com­pa­ny­ing chart shows.

To cut a long story short, de­mon­e­ti­za­tion has failed to stem the us­age of cur­rency in the fi­nan­cial sys­tem.

In this re­spect, we have re­verted to our old habits. We are back to square one.

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