Strange part about this is that they are going to issue new 500 and 2000 notes as per
> 8:32 pm: A new series of Rs. 500 currency notes and Rs. 2000 currency notes will be brought into circulation.
Pulling current notes I can understand, but the problem is that the denomination allows people to move lots of money in a minimal amount of space, so replacing them isn't really solving the problem.
It is. To get new notes, you will have to submit the old notes to the bank. In that case, you will have to declare the money to the Income Tax department. And if the sum is huge, a criminal enquiry will be started by IT department.
Also this will at once curb all the fake note issues.
Isn't this exactly the issue addressed by money laundering? Would this not simply force a large number of people into dealing with organisations or individuals who can convert their existing stockpile of (no longer valuable) cash into a smaller pile of cash that still has buying power? A naive approach would be to 'hire' a large number of people to cash in amounts of notes that would be just under the level considered suspect by promising them a cut of the exchanged money. I'm sure there are existing criminal networks that could achieve such schemes (or better thought out ones) within the window of Nov 10 to Dec 30.
No one will be willing to do that work. And its difficult to scale such operations. They may convert some small amount (probably upto 50k), but anytihng more than that, it'll be getting tougher
The duplication is a minor concern the major concern is lost income tax revenue due to an underground cash economy. By restricting numbet of 500 and 2000 notes and forcing owner declare assets it put massive pressure on the black money.
Meanwhile you only need three 500€ bills to make up for the average European income.
(And 500€ is 36651 rupees.) Those 500 and 1000 rupees are the largest denomination bills in India, but you need almost 10 times more of them to make up for the respective average income.
In fact, the same is said in Europe about the absolute uselessness of 200 and 500 euro bills. I have only held a 200 euro bill once, and never a 500, but also thanks to the Schengen area it is trivial to (illegally) being insane amounts of money to Switzerland. This is why the EU was pressuring Switzerland to abolish bank secrecy.
If you're spending 30k, paying an extra 20 for a banker's draft is insignificant. And it's not like you buy a car every week. (I also can't imagine feeling safe carrying anything like that much cash around. What if you lost it?)
Banker's drafts can be an even bigger pain in the ass in the EU, with some banks charging percentages for them... And losing one of those tends to be a Bad Thing too.
Anyway, my point was that despite being rare the 200 and 500 euro notes are far from "absolutely useless".
I really struggle to see how it's useful to an ordinary person. You maybe save a little money, sure, but for a non-1%er the risk just seems completely disproportionate. I mean any dealer/business would accept a bank transfer, right? So it only makes sense in the first place for buying a car person-to-person (and for friends/family a bank transfer would work too). Carrying 30k to meet a more-or-less stranger who knows you're going to be carrying 30k? Sheesh.
Are banker's drafts the same thing as money orders? That's how I paid my cars; they are worthless if stolen (though if you lose them, the money's gone) because only the recipient can convert them back. Banks give them out for the same cost as withdrawing cash, which is a few euros.
Currency conversions are largely irrelevant to most people's daily life. What matters more is how much you get paid, the cost of house, food, and transportation.
Always think in terms of local currency or you will do much worse than getting down-voted. As my wife says about Chinese currency: "You have to respect the RMB!"
Pulling current notes I can understand, but the problem is that the denomination allows people to move lots of money in a minimal amount of space, so replacing them isn't really solving the problem.