India's Misguided War on Cash
&gt;  Anyone with outstanding notes must either deposit them in a bank -- potentially incurring a tax -- or exchange them for replacements in strictly limited sums.<p>Incurring a tax is the entire point of replacing the old currency. A large portion of the black untaxed money is untraceable in the form of cash, so getting them into banks and taxed is the first step.<p>This article is overly negative about some negative things that are part of the expected outcome, that even the people who are proponents of the change admit. Of course there are obvious drawbacks to invalidating most of a nation&#x27;s currency at once, the point is how this process benefits the country.<p>A lot of poorer Indians barter or use smaller cash denominations anyways, and the government isn&#x27;t trying to crack down on that; comparing India to Nigeria in that sense doesn&#x27;t matter. And reducing the economy of the entire country temporarily is very intentional- if a big part of your country&#x27;s business dealings is with illicit cash, cracking down on it will of course reduce the market.<p>The idea is to sacrifice some money in order to reduce corruption and increase the trust in government and business systems. If that is successful, then this move is very beneficial for India in the long run.