WE HAVE BEEN TALKING ABOUT THE RE-ALIGNING OF THE FINANCIAL SYSTEM WELL INCLUDES THE RE DENOMINATING OF MANY CURRENCIES GLOBALLY. SO LET’S TAKE A LOOK AT THIS BUT BEFORE WE DO LET’S REFRESH OUR MEMORY ON WHAT EXACTLY BLACK MONEY IS.
What is ‘Black Money’
Black money is money which is earned through any illegal activity controlled by country regulations. Black money proceeds are usually received in cash from underground economic activity and, as such, is not taxed. Recipients of black money must hide it, spend it only in the underground economy, or attempt to give it the appearance of legitimacy through money laundering.
THIS BLACK MONEY IS VERY COMMON IN COUNTRIES THAT STILL HAVE NOTES WITH MANY 000’S ON THEM SO THIS IS ONE OF THE THINGS THAT IS BENG CLEANED UP AS PART OF THE ANTI MONEY LAUNDERING LAWS AND IN A BID TO CURB CORRUPTION AND MAKE EMERGING ECONOMIES MORE ATTRACTIVE TO THE INTERNATIONAL FINANCIERS THAT ARE TRYING TO PUT PRIVATE CAPITAL TO WORK.
ALL CURRENCIES HAVE TO BE ON THE SAME PAGE AND FOLLOWING THE SAME LOOK. SO HERE WE HAVE INDIA BEING ADDED TO THE LIST OF OTHER CURRENCIES THAT HAVE RESTRUCTURED THEIR NOTES. LET’S LOOK AT THIS AND IN DOING SO IT WILL HELP US UNDERSTAND HOW THE REMOVAL OF THESE NOTES WILL BE HANDLED. SO FAR ALL HAVE BEEN FOLLOWING THE SAME RULES AND II THINK INDIA WILL BE NO DIFFERENT.
Black money: RBI set to scrap Rs 1,000 currency note?
It was almost two years back that the Reserve Bank of India (RBI) had announced its plan to phase out all currency notes issued before 2005. The central bank gave three-month time to exchange old notes for new, after which all such kind of exchanges, particularly for larger denominations, would need address proof and identity. The step was taken apparently to block fake notes, as they were mostly from pre-2005 vintage. However, did black money have anything to do with it?
PERHAPS SOME SARCASM IN THAT LAST LINE BUT SEE THEY ARE ALSO ENFORCING THE “WHERE DID YOU GET THIS” RULE AS A PART OF THE ANTI MONEY LAUNDERING ACT.
Since it was a pre-election season, there was always a fear about the large flow of illicit money during polls. RBI had the pressuring of going easy. It extended the deadline to turn in old notes beyond 2014 general elections. Certainly, the central bank would have denied any connection of its deferral to polls.
Currency notes are the preferred mode for moving of illegal money. During election time, money spend in India is far more than prescribed official limits, the issue which the Election Commission has raised time and again, the opinion added.
In most countries, the role of cash is diminishing. Instead of it, Credit and debit cards, prepaid cards, digital wallets, online money transfers are being encouraged. In India too, most transactions are now done electronically.
INDIA IS A BIT MORE ADVANCED IN DIGITAL WALLETS AND ALONG WITH THE CURRENCY RESTRUCTURING WE WILL BE SEEING THE DIGITAL WALLETS COMING ONBOARD IN EMERGING NATIONS.
According to an opinion that appeared in the live mint website, the granting of payments bank licenses along with the coming up of Internet will lead to speedy proliferation of digital and mobile payments, and a smaller role for cash. Even microfinance companies in India have moved to cashless disbursal and collection.
The opinion, therefore suggest that both Rs 500 and Rs 1, 000 notes be phased out from the country. It argues that discontinuation of the Rs 1,000 rupee notes will surely make an impact on the black money stock. Therefore, It is time has come to bid adieu to the big note.
YES VERY GOOD SO WE CAN ALL KEEP OUR EYES OPEN FOR WHO ELSE IS RESTRUCTURING THEIR NOTES. THIS WILL HELP US TRACK THE PROGRESSION OF THE MONETARY RE-ALIGNMENT.