Demonetisation not meant to change cash use by people: Harvard economist -Governance Now

Demonetisation not meant to change cash use by people: Harvard economist

There is a need to keep some form of physical currencies in circulation, indefinitely, said Harvard economist Kenneth Rogoff

Pratap Vikram Singh | July 22, 2017 | New Delhi

#The Curse of Cash #Kenneth Rogoff #Harvard #Demonetisation #Delhi Economics Conclave

Here are 10 things that Kenneth Rogoff, Thomas D Cabot professor of public policy, department of economics, Harvard University, and author of 'The Curse of Cash', said about demonetisation at the Delhi Economics Conclave 2017:

1. The core idea for demonetisation is to make it difficult for people to do large transactions in cash but not to dramatically change how cash is used by ordinary people.

2. He argues that there is a need to keep some form of physical currencies in circulation, indefinitely.

3. In legal economy cash less society is more about the carrot than stick.

4. It is important to be able to retain cash for privacy. The question, however, is the scale (of retaining cash).

5. The Indian demonetisation might yield long run benefits, but it also shows things to avoid. Reports show that it had short term negative impact on the macro-economy.

6. In the book, the argument for demonetisation was for advanced economies, not for developing economies.

7. The book proposed a gradual pause out of higher currency notes or bills — five to seven years. India did it overnight.

8. India replaced high currency notes with even higher currency.

9. Moreover, it didn't have the new bills ready when it went for sudden demonetisation.

10. The advanced economies have a very high tech system to replenish currency. Even they take six months to be year to print a new supply.

Read: Currency change: “Long-run gains depend on implementation”

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