Is Pakistan eager to follow cashless India?

The spike in oil prices and the ensuing balance-of-payments crisis during the First Gulf War in 1991 forced India to dismantle its licence-permit-raj economy. The difficult task fell to Manmohan Singh, the then finance minister, who aptly quoted Victor Hugo as he announced structural reforms in his budget speech: “No power on earth can stop an idea whose time has come.”

Recently in Pakistan, the idea of demonetising the 5,000 Pakistani rupees note has been gaining traction. Before policymakers plunge headfirst, they may want to gauge whether the time has truly come for demonetisation by assessing its benefits and costs.

In demonetisation, governments take out particular banknotes, while sharing mechanisms through which the demonetised currency may be exchanged or deposited in banks – demonetised currency no longer remains legal tender.

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The cashless society from an ethical point of view

The debate about the move towards a cashless society has been at the center of the scene for several years, now. Various angles have been taken by economists, politicians, banking institutions and sociologists. Beyond the technicalities of the debate, lies the question of freedom, of inter-citizen solidarity and of governmental responsibility. The debate cannot remain in the hands of financial specialists, it is first and foremost an ethical, political and societal issue.

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