Indian Prime Minister cancels 500 and 1,000 Rupee notes.
This was big news among my Indian coworkers earlier in the week. The news got kind of buried for obvious reasons. (I expected WBEZ's "Worldview" to cover it, and they haven't yet.) I haven't read this yet, but I was kind of waiting for the US financial news to notice.
The biggest story on Indian television yesterday wasn’t the election of Donald Trump. For on Tuesday night (IST), Indian Prime Minister Narendra Modi in a surprise speech declared that currency notes of rupees (Rs) 500 and Rs 1000 — the highest two denominations in circulation– would be invalid as of midnight that same night. The withdrawn notes could no longer be used for transacting business or as a store of value for future usage (with some limited exceptions, but even these were only allowed for a short transition period).
Basically, this is the functional equivalent of the US cancelling the $20 and $100 notes.
My coworkers tell me that this affects real estate buyers and sellers and government workers. The real estate business is entirely corrupt. Real estate sales are reported to the government at a fraction of the actual transaction price, in order to avoid taxes. The government workers who record the false data are bribed and he money has to be kept in cash, or else it will be discovered and taxed.
So, anyone who is in the real estate business has lots of "black money" in cash lying around. Of course, politicians and government workers who accept bribes also have lots of cash as well. The people here see this as an anti-corruption tactic.
I'm going to read up more on this and comment later.
Re: Indian Prime Minister cancels 500 and 1,000 Rupee notes.
A variant of this exist in the US, if you're traveling with too much physical cash and fit a certain profile, it's confiscated and assumed it's from illicit gains until you can prove otherwise.
The extra fun part is that cops will often require large bail sums in cash, and then confiscate the large cash as proof the person was involved in illegal activities otherwise they wouldn't have so much physical cash.
Indian is removing these notes instantly because of corruption and has introduced higher denomination R2000 notes.
The ECB and BOE articles are about ending production and circulation of notes that aren't that much needed in future, and make it clear notes in circulation remain legal tender.
Re: Indian Prime Minister cancels 500 and 1,000 Rupee notes.
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Originally Posted by JoeP
Yes, at least one Indian colleague has complained about this - but not too bitterly, as they recognise the endemic corruption behind it.
I think my colleagues were surprised - it's caused some inconvenience, some minor, some not. One coworker will lose a few thousand rupees (less than $100 or so) because he's in the US, but his parent are traveling and will have to make sure to come home before the banks end the cash-in program.
Now, most of the people I know who are in the US are comfortably middle-class, so unless they have relatives or friends who are in real-estate it's not affecting them too badly.
The Naked Capitalism post, and a few other articles I've read indicate there will be a short-term constricting of economic activity overall, since it's estimated half of all economic activity is cash-only. This is more likely to negatively impact poor people short-term. Hopefully, Modi is making this gamble because less corruption will be good for the general populace in the long term.
We all speculated that the really rich criminal and politicians have converted black money to other stores of value, like gold, so the big players are probably less impacted by this.
One of the things we talked about during lunch was that Modi is a Hindu nationalist - functionally similar to the Christian right-wing.
I'm mildly surprised that Modi actually seems to care about corruption, and is taking a bold, risky move that might help. I can't imagine the US's Republicans doing this.
Similar, but the Indian thing is bigger by a couple of orders of magnitude, and since the scheme includes the introduction of a 2000rupee note, I grant the similarities pale into insignificance alongside the differences.
The Treasury estimates that £1.3bn of coins are being stored in savings jars, with £1 coins accounting for almost a third of these. They must be exchanged before 15 October when they will cease to be legal tender.
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It is estimated that 3% of the current coins in circulation are fake.
The new coin is going to have a hologram. I'm intrigued.
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About 40% of vending and other cash-receiving machines will have to be upgraded. The British Parking Association says each meter change will cost £90-£130 for the simplest software upgrade and considerably more if they are to issue change. The Royal Mint has put the cost of changing all the UK’s machines at £15m-£20m, although many experts believe this is optimistic.
Re: Indian Prime Minister cancels 500 and 1,000 Rupee notes.
I ... um .. have a friend who ... may ... have used the Swazi 1 lilangeni coin, which is the exact size and weight of the current British pound coin, in coin machines in London. And it's worth about 5p. Swazi lilangeni - Wikipedia
Indian is removing these notes instantly because of corruption and has introduced higher denomination R2000 notes.
The ECB and BOE articles are about ending production and circulation of notes that aren't that much needed in future, and make it clear notes in circulation remain legal tender.
They aren't much needed in the present either. Most supermarkets don't accept them and I doubt there are many other stores that do. In fact supermarkets usually don't even accept 100 euro bills.
Re: Indian Prime Minister cancels 500 and 1,000 Rupee notes.
I don't think the thing on the new pound coin is really a hologram. It's a set of small ridges that when viewed from, say, the left, looks like a £ symbol, and when viewed from the other side is the numeral 1. The Mint is intending to use a similar trick on all the new coins.
I think the ridges are just 'coined' in the usual sort of way, but apparently it will be difficult for forgers to make the necessary stamps and dies to produce similar ridges on any fake coins.
By the way, I made some posts in the Miscellany thread about the new pound coins. This was the first one, I think. I've agreed to send some to Megatron once they're available.
Indian Prime Minister cancels 500 and 1,000 Rupee notes.
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