Demonetisation: 5 countries that tried currency reforms and failed

While the Soviet Union's attempt fostered a coup, the one in Zaire saw the end of the dictatorial regime that launched it

On the evening of November 8, 2016, Prime Minister Narendra Modi proclaimed that Rs 500 and Rs 1,000 currency notes would no longer be regarded as legal tender. The move came in the wake of the promise he made to curb black money. Ever since the announcement was made, there have been mixed reactions to it. 

However, demonetisation is not  a new phenomenon. Countries in the past have tried to regulate their currencies and mostly failed. Business Standard brings you five instances when governments across the world failed to implement currency reforms. 

Ghana

In 1982, in order to reduce tax evasion, curb corruption and manage liquidity, Ghana demonetised its 50 cedi currency note. The move backfired, with the public losing faith in the banking system and switching over to physical assets and foreign currency.

Nigeria

An anti-corruption crackdown was conducted  by the military government led by Muhammadu Buhari in 1984. He issued new currency notes with new colours so that old notes would be rendered unusable within a limited time frame. The goal to fix a debt-ridden and inflated economy was not achieved.

Myanmar

In order to curb the black market, the country's military invalidated 80 per cent of the currency in 1987. The first ever student demonstration was held against this move. 
 

Soviet Union

Under the leadership of Mikhail Gorbachev in January 1991, the erstwhile Soviet Union withdrew 50 and 100 ruble notes, in order to eliminate black money and increase the currency value. The notes accounted for a third of the total money in circulation.

Gorbachev faced a coup within eight months in August as the move was not a success. The 1991 attempt led to a successful re-denomination of the ruble in 1998 where three zeros were removed. This was followed by another currency switch in 2010 when two more zeros were removed from the old currency. The 2010 attempt was not as successful as the timing coincided with a poor harvest.

Zaire

Dictator Mobutu Sese Seko's administration laid out back-to-back currency reforms along with a plan to withdraw obsolescent currency from the system in 1993. The reform was not well received by the public and resulted in increasing economic disruptions. Mobutu was ousted in 1997.