Cashless Society/Economy

Cashless Society/Economy

Introduction

A cashless society describes an economic state whereby all the financial transactions are done using cards or digital means. The circulation of physical currency is minimal.

Such a concept has been discussed widely, particularly because the world is experiencing a rapid and increasing use of digital methods of recording, managing, and exchanging money in commerce, investment and daily life in many parts of the world, and transactions which would historically have been undertaken with cash are often now undertaken electronically. Some countries now set limits on transaction sand transaction values for which non-electronic payment may be legally used.

How Can We Do This?

We might think how a cashless economy is possible when money is the major source to run day to day life. Well, such an economy might have been a bad dream if it was planned to be implemented a century ago.

We are now living in a world where Internet has taken over every place. Wherever we go, we carry our Debit Cards and Credit Cards. If we were to apply the concept of Cashless Economy keeping in mind the age old practice of seeing Money as a paper, may be the cashless economy would sound like a pointless scheme. But when we think of such an economy with the appliance of today’s technology where no liquid money is used, the whole idea of Cashless Economy can be understood.

Advantages of Cashless Economy

A cashless economy will allow less tension of tackling a wallet full of notes along with us, which is not at all safe in a world full of anti-socials. We can rather use our mobiles as a one stop solution for all kinds of transactions such as bill payments, fees payments, funds transfer, recharge etc.

Crime rates will be diminished due to cash ban as most of the terrorist activities are funded with black money. In addition to this, other crimes such as burglary, extortion, bank robbery etc. will also decline.

One of the biggest advantages is the increase in the span of the income tax.

Conclusion

Above all, the cashless economy will lead to the most convenient and secure economy for all. In short, a cashless economy can only be possible with sufficient infrastructure and planning that are required for supporting an economy like India.

Demonetisation

Demonetisation

Introduction

Demonetisation is the act of removing a currency unit of its status as legal money. Demonetisation is necessary whenever there is a change of national currency. The old unit of currency must be retired and replaced with a new currency unit.

Reason of Demonetisation

There are multiple reasons why nations demonetise their local units of currency. Some reasons include combating inflation, to combat corruption, and to discourage a cash system. The process of demonetisation involves either introducing new notes or coins of the same currency or completely replacing the old currency with new currency.

History of Demonetisation

In 2016, the Indian government decided to demonetise the 500 and 1000 rupee notes, the two biggest denomination notes. These notes accounted for 86% of the country’s cash supply. The government’s goal was to eradicate counterfeit currency, fight tax evasion, eliminate black money gotten from money laundering and terrorist financing activities, and provide a cashless economy.

In 2015, the Zimbabwean government demonetized the Zimbabwean dollar as a way to combat the country’s hyperinflation that was recorded at 231,000,000%. Fiji, Singapore and Philippines were other countries to have opted for currency demonetisation.

Another example of demonetisation occurred when the nations of the European Monetary Union adopted the euro in 2002. In order to switch to the euro, authorities first fixed exchange rates for the varied national currencies into Euros. When the euro was introduced, the old national currencies were demonetized. However, the old currencies remained convertible into Euros for a while so that a smooth transition through demonetisation would be assured.

Impacts of Demonetisation

It has major impact on corruption and also on financing of terror activities. It also will curb the menace of black money and will help check storing of funds to a large extent.

Conclusion

The demonetisation always affects some extent to the general public, but for larger interest of the country, such decisions are inevitable. Also it may not curb black money fully, but definitely it has major impact in curbing black money to large extent.