India is in shock. There is only one topic left. Social media is hot!
This evening, Prime Minister unexpectedly announced that from tomorrow, Wednesday, November 9, 2016, all banknotes above 500 and 1000 rupees will be invalid. In doing so, he is defacto abolishing cash – for a certain period of time. Tomorrow the 100 rupee note (equivalent to €1,50) will be the world's most valuable banknote for cash transactions.
There will initially be one (or two) bank holidays; the banks remain closed. After that, Indians will be given a one-time opportunity to exchange their money and declare untaxed money.
This action is to be understood as an uncompromising fight against corruption, the shadow economy, money laundering and terrorist financing.
New banknotes should be available in a few days or weeks. The central bank will issue new notes of 2.000 and 500 rupees and then reintroduce cash.
In the meantime, people will have to prepare for some difficulties in daily life, for which Modi has already apologized in his speech. Because India is considered a “cash” country. Cashless payment transactions play a minor role in the overall economy. Virtually all transactions are paid in cash.
This “action sharp” is viewed predominantly positively on social networks. Nevertheless, there will be big problems for many people tomorrow. We'll keep you up to date.
Update on the topic: Reserve Bank of India FAQs (RBI)
