HOW A CASH CRUNCH IN INDIA LED TO THE WIDESPREAD ADOPTION OF E-PAY TECHNOLOGY

India was facing intense levels of the production of counterfeit bills and tax evasion. To fight this issue, the country introduced demonetization. On the evening of November 8, 2016, India’s government made a surprise announcement that pertained to 86 percent of the country’s cash. Starting at midnight, 500- and 1,000-rupee cash notes would be invalid. Instead, people had to deposit those bills in banks, then withdraw an equivalent amount in new notes. While this may have seemed like a good idea for the country, challenges occurred. The replacement bills were not distributed fast enough, and the country entered a huge cash crunch that lasted about three months. This resulted in people finding alternative currencies to shop with. A temporary policy intervention was sufficient enough to motivate a significant amount of people to switch to e-payment permanently.   Read More >>

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