Demonetization is the act of stripping a currency unit of its status as legal tender. It occurs whenever there is a change in national currency. The process can be initiated by either the government or the central bank. When demonetization occurs, old notes are pulled from circulation and new ones are introduced. In some cases, citizens may be allowed to exchange their old notes for new ones at a set rate.There are several reasons why a country might choose to demonetize its currency. One reason could be to combat corruption or tax evasion. By removing large bills from circulation, it becomes more difficult for people to store large sums of money without detection. Another reason could be to reduce the amount of cash in circulation in order to fight inflationary pressures.While demonetization can have benefits, it can also cause problems for citizens who rely on cash transactions for their livelihoods. For example, small business owners may not have access to electronic payment systems and may struggle when they are unable to use their old currency notes anymore.
