What should be the highest currency denomination for India

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The RBI recently withdraws the Rs 2000 note from circulation citing its clean note policy. The withdrawal of Rs 2,000 notes however was not unexpected as RBI had been bringing down the chunk of Rs 2,000 notes over the years since the demonetization in 2016. The issuance of a high denomination note of Rs 2,000 was a necessity at the time of demonetization in 2016 because the withdrawal of currency had impacted 86 per cent of the total currency in circulation in the system. The million dollar question among citizens is what should be the highest currency denomination India.

The highest currency denomination of a country is a decision made by the respective government and central bank based on various factors, including economic considerations, inflation rates, transactional efficiency, digital payment infrastructure & its acceptance, and security concerns. There is no universal answer to what the highest currency denomination should be, as it can vary from country to country. However, here are some considerations:

1.?????Convenience and Efficiency: The highest currency denomination should be convenient for everyday transactions and efficient for both consumers and businesses. It should facilitate easy exchange and minimize the need for carrying large amounts of cash.

2.?????Economic Stability: The highest currency denomination should be in line with the economic stability of the country. It should not encourage excessive money printing or contribute to inflationary pressures.

3.?????Value Representation: The highest currency denomination should adequately represent the value of goods and services within the country. It should be able to accommodate the prices of high-value items without becoming impractical or burdensome for transactions.

4.?????International Comparisons: Considering the country's position in the global economy, it may be beneficial to align the highest currency denomination with international standards. This can facilitate ease of conversion and transactions for international trade and tourism.

5.?????Counterfeit Prevention: The highest currency denomination should incorporate security features that make it difficult to counterfeit. This helps maintain the integrity of the currency and protects against fraudulent activities.

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However, there is certainly an undefined thumb rule which does not have any scientific ?reasoning but being followed by major economies. The highest denomination of currency shall be 0.15-0.25% of per capita GDP. By going with this rule Rs 500 currency is well suited to our economy. ?

Country Currency Per capita GDP % of GDP Required Highest Note

India RUPEE 172000 0.25 430 500

USA US $ 76349 0.15 114 100

CANADA CAN $ 72480 0.15 108 100

UK GBP 32904 0.25 82 100

JAPAN YEN 5616000 0.18 10108 10000

INDONESIA Rp 64546800 0.16 103274 100000

Ultimately, the determination of the highest currency denomination involves a careful assessment of a country's economic and social factors. It requires a balance between convenience, security, and the overall monetary policy goals of the nation. Central banks and governments regularly review and adjust their currency denominations based on evolving needs and circumstances.

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