It’s been close to a month since the Prime Minister of India, Narendra Modi, on November 8 made his assumedly smart and calculated move with the most unanticipated announcement. All 500 and 1000 rupee bank notes (Mahatma Gandhi series) ceased to be legal tender from midnight of the same day the proclamation was made. The motives behind this demonetization were primarily to combat corruption, track the flow of “black money”, and curb terrorism funding that is linked to counterfeit rupee notes. The intentions, without an iota of doubt, are laudable, but where do citizens stand weeks later with the wide ramifications of this stern decision, as they cringe for cash ?
The deadline stands at the end of the year to exchange the banned currency with notes of other denomination including the freshly issued 500 and 2000 rupee notes. The demand is much higher than the new available currency, and in spite of restrictions imposed on the amount one can withdraw at a time, banks and ATM’s are running out of cash. Long spiral lines of customers desperately waiting to exchange money have become a rather distressing sight. For an economy that operates predominantly on cash with very little of the credit card and debit card culture in vogue, daily transactions have become a challenge for the lower and upper middle class population. Political pundits talk either way, and only time will tell whether demonetization was a blessing or a bane for the country.
On a totally different spectrum from the demonetization chapter comes another money story. The British central bank in September issued a new 5 pound note that created quite a sensation. It replaced paper with polymer which, besides being more durable, is also perceived as being environmentally friendlier. Because of their durability, polymer notes do not need to be printed in large quantities, and as a result, manufacturing and cash transportation do not require loads of energy. A rather catchy headline of the New York Times read “Britain’s New 5-Pound Note is Chewable, Washable and Harder to Fake”. It was rumored that the bill apparently has the capacity of remaining untarnished even after a spin in the washing machine under extremely hot water conditions.
Stories about its impressive quality were publicized to such a level that it was reported that Britain’s new fiver could play vinyl records. A UK native released an interesting video where he had the sturdy currency operating like a turntable needle. And of all songs, it was used to play ABBA’S classic hit “Money, Money, Money”.
Well, after all the hype and hitting the highs, here comes the low. After having advertised its new fiver as cleaner, safer, and stronger, the Bank of England earlier this week confirmed that tallow was used in the base of the new notes. Tallow is essentially hard fat derived from beef and mutton and used for making soaps, candles, and lubricants. This revelation by the bank has led to wide outrage among vegans and vegetarians across Britain. A petition with over 100,000 signatures demanded on Wednesday that the Bank of England make a vegan-friendly currency. Tallow being used in the note and being unacceptable to the vegetarian and vegan population who respect animal welfare is understandable. But there’s another part to the story about why it’s important that the new notes be vegetarian. Appropriately titled “The Bank of England Knows How Many People are Eating its Cash”, Bloomberg highlighted an interesting statistic using the bank’s own figures that 1.5 million of UK cash notes were either chewed or eaten since 2003! As fictional as it may sound, it’s solid truth.
Who knows what other story is brewing in the money market and will catch us unawares? The world economy never ceases to take us by storm, and the possibilities for surprises are undoubtedly limitless.