India: here is what happens when a society goes temporarily cashless

The potential disappearance of cash is a big worry for a lot of people in the UK at the moment.

With every report of cash machines being removed, physical money use declining, or bank branches shutting, fears grow that society is heading for a cashless future.

So, imagine what would happen if the Government suddenly announced plans to axe almost 90 per cent of banknotes in circulation? That is what India did and a new report from Harvard University has analysed the effects.

Predictably, it caused chaos, as while Indians were quick to return the old banknotes, replacement ones came more slowly. 

Even when they were available the replacement was uneven across the country, meaning that for eight months many Indians were left without access to cash.

Now, a new report from Harvard University's Quarterly Journal of Economics has looked into the results of the Indian government's demonetisation, with some eye-opening findings.


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