Tag Archives: Demonetisation

Eliminating high denomination notes and making the mob miserable

Ronnie Driver

Economists usually talk about money serving three functions – a medium of exchange, a store of value, and a unit of account.  But the ability to make payments using commercial bank deposits, which account for the vast majority of money, has already divorced the physicality of notes from the concept of the medium of exchange. Inflation and non-remuneration renders physical money a poor store of value.  And the unit of account does not rely on physical cash.  So is there a specific role for physical paper money anymore?

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Filed under Currency, Economic History