What will investigating or banning high-value banknote denominations like 500 euro or 1,000 Swiss francs do? Politicians are themselves throat-deep in the crime pit - they take bribes during military equipment deals, they murder civilians via wars, they stash black money in Swiss banks, etc. Publicly they decry currency notes of high denominations, but privately they need small-volume-small-weight-high-value methods as means of payment and also to get paid. To rescue come precious/rare metals such as Gold and Platinum [that also happen to be very, very liquid as well]. You can transfer crores/millions via small amounts of Platinum, for example. So not much use banning the 500 euro "Bin Laden" note.
Update [Feb'17]: And no one can stop barter, the best insurance against sanctions and demonetisation of currency notes. Like between Iran and Russia.
Update [Mar'17]: Another example. A packet of 100 banknotes of AED 1,000 is worth about INR 18+ lakhs as of today. A massive amount of money neatly stored in a small packet.
Update [Feb'17]: And no one can stop barter, the best insurance against sanctions and demonetisation of currency notes. Like between Iran and Russia.
Update [Mar'17]: Another example. A packet of 100 banknotes of AED 1,000 is worth about INR 18+ lakhs as of today. A massive amount of money neatly stored in a small packet.
Considering that US dollars and euros are very liquid in India, I'm pretty sure that at least some politicians/ministers, high-ranking government officials, businessmen, traders, etc., stash their black money in the form of high-denomination dollar and/or euro currency notes in order to dramatically reduce the volume footprint.
ReplyDeleteOf course, there's no way to disprove this and it's very difficult to prove it.
Lol, the comment on 08-Nov came at such a right time. Narendra Modi dropped the financial equivalent of a thermonuclear bomb on India that night. Anyway, it's clear that many Indians will, going forward, keep black money in dollars/euros/gold. Modi can't demonetise these no matter what he does.
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