India is not a stranger to demonetisation as Prime Minister Narendra Modi recently marked the third time in history that currency notes have been demonetised in India. However, the recent currency ban of Rs 500 and Rs 1000 notes is the biggest currency ban in India’s history, making more than 80 percent of hard cash in circulation effectively worthless.
As the country adjusts to the new currency norms, here is a list of other countries that attempted demonetisation, sometimes with not so successful results.
In January 1991 under the leadership of Mikhail Gorbachev the country withdrew 50 and 100 ruble notes from circulation in an attempt to remove black money and increase the currency value. The removed notes formed around one third of the total money in circulation.
The large scale demonetisation was not successful and Gorbachev faced a coup merely months later in August, however the 1991 attempt led to a successful redenomination of the ruble in 1998 where 3 zeros were removed, which was followed by another currency switch in 2010 when 2 more zeros were removed from the old currency. The 2010 attempt was not as successful as the timing coincided with a poor harvest.
In the early 1990s, the Dictator Mobutu Sese Seko administration rolled out successive currency reforms along with a plan to withdraw obsolescent currency from the system in 1993. The successive reforms resulted in increasing economic disruptions until Mobutu was ousted in 1997.
The military invalidated nearly 80 percent of the value of money in circulation in 1987, in an attempt to curb the black market. The action triggered the first student demonstration in years, before a government crackdown came into affect the next year.
In 1982, the country demonetised its 50 cedi currency note to reduce tax evasion, address corruption and clear excess liquidity, however the move resulted in the public turning to foreign currency and physical assets. The general public lost confidence in the banking system and a fresh black market for currency began.
Military government led by Muhammadu Buhari conducted an anti-corruption crackdown in 1984, issuing new currency notes with new colours so that old notes would be rendered unusable within a limited time frame. The goal had been to fix a debt-ridden and inflated economy but was not successful.
India has successfully adapted to changes in currency twice in the past.