DEMONETIZATION Meaning and
Definition
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Demonetization refers to the process of stripping or removing the legal status of a particular form of currency as a medium of exchange within an economy. It involves rendering certain banknotes or coins as no longer valid or acceptable in transactions. This action is usually undertaken by a government or monetary authority to tackle specific economic or societal issues.
The primary objective of demonetization typically revolves around controlling illegal activities such as corruption, tax evasion, counterfeiting, and the accumulation of black money. By invalidating certain denominations or types of currency, the government aims to disrupt and discourage these illegal practices, which often occur in cash-heavy economies. Additionally, demonetization may also help in transitioning towards a more digitized or formal economy, promoting financial inclusion, reducing the circulation of counterfeit currency, and enhancing transparency in financial transactions.
The process of demonetization frequently involves a fixed timeframe during which individuals are given the opportunity to exchange or deposit their old currency with new or alternative legal tender. This allows for a smooth transition and minimizes disruption to the economy. However, demonetization can lead to temporary challenges such as cash shortages, economic slowdown, or inconvenience for those relying heavily on cash transactions.
Overall, demonetization represents a significant monetary policy tool that governments employ to address specific economic concerns, while aiming to modernize the financial system and foster greater compliance with legal and regulatory frameworks.
Common Misspellings for DEMONETIZATION
Etymology of DEMONETIZATION
The word demonetization is derived from two Latin roots: de meaning remove or undo, and moneta meaning money. It is formed by combining the prefix de- and the noun monetization.
Similar spelling words for DEMONETIZATION
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