As they say a bank is as good as the next bad rumor..
Following crack down on some bank officials of a leading Indian bank, there were rumors that RBI could cancel the licence of the bank. This was followed by RBI releasing an urgent press release yesterday denying any such move:
As one worried, the Indian demonetisation exercise could inspire many other countries going ahead. After all if one can knock off 86% of currency in a country like India, it is much easier to do in other countries.
Venezuela is the first to follow which knocked off its highest denomination till date – Bolivar 100 – from circulation. The 100 note is worth just 2 cents and requires bags of notes to even buy a loaf of bread. It is estimated as 48% of the total currency circulation.
Obviously the contexts are very different. India was doing fine – it had steady growth, low inflation and so on. Venezuela had everything in opposite and it is not surprising to see its Government come out with some tricks to sideline the other major issues. But then most demonetisations in the past have happened to counter several economic malaise as well.
The President of Venezuela Nicholas Maduro said in the typical heroic fashion – we must keep beating the mafias:
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