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James Wilson @jamewils
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Most hilarious news of the day!!

That "chip" note, which claimed to end fake currency & kill black money is now going to have a premature death..

Even Tughluq cant stop laughing 🤣…
Now my prognosis:

Dont fall into the news that these notes are going to be withdrawn, they will stay there!!

RBI is in a dilemma with these ₹2000 notes, which used as a quick fix solution, yep, they are facing the proverbial situation of between devil with deep sea.
₹2000 notes was a quick fix solution during DeMon to replace ₹1000 notes, which are in circulation, numbering 6.858 billion, which constituted 38% of the total Currency in Circulation (CIC).


If you change the denomination, you should need only 3.429 billion ₹2000 notes
Why they go for this solution then?

Because our 4 printing presses together can print only 2.007 billion notes in a month.

Now see that RTI disclosure by RBI of having 2.473 billion ₹2000 notes as of 8th Nov 2006.

37 days took to print them, only after Urjit became Governor
But this Tughluqian solution was defying all logic of the mix of denominations of CIC.

Within days of DeMon, people found out that this hot potato has no change!!! Exisiting 10% ₹100 notes were not able to meet the demand for change. Remember, you need 20 ₹100 notes as change
So they started circulating ₹500 notes 3rd week of November. But here too because of the elimination of ₹1000 notes, 4 no. of ₹500 notes needed.

Demand for ₹500 notes were more than 17.165 billion existed before DeMon, due to void of ₹1000 notes.
Now look at how these ₹2000 notes number on various dates.

8 Nov 2016: 2.473 billion
31 Mar 2017: 3.285 billion
31 Mar 2018: 3.363 billion

What is this means?

73.5% ₹2000 notes printed before DeMon.
24.1% added in next 5 months.

ONLY 2.3% notes added in next FY
How much ₹500 notes were in circulation as of 31/3/18 against 17.165 billion numbers before DeMon?

As per RBI report, its still 15.469 billion while ₹100 increased 9.6% to 12.3% during same period.

They also introduced ₹200 too.
So what is the currency mix of ₹1000 & ₹2000 based on VALUE (not volume) in 2016 & 2018

Highest denomination (Value %)

2016: 38.6%
2018: 37.3%

This is still not enough to meet the demand for change of high denomination, as ₹2000 needs more lower denominations.
CIC has been now increased to ₹20.3 lakh crores from ₹17.2 lakh crores before DeMon.

A healthy mix of ₹2000 notes is somewhere close to 35-36% of total CIC.

So max no. of ₹2000, which now exits will be around 3.65 billion.

We will get the exact figure in next RBI AR
Now why I said that RBI is between devil and deep sea?

Firstly, printing woes.

To replace this 3.65 billion ₹2000 notes, RBI has to print..

with ₹500 - 14.6 billion notes
with ₹200 - 36.5 billion notes
with ₹100 - 73.0 billion notes
Our printing press can print a maximum of 24 billion notes in an year.

They have to print new notes to replace the soiled notes and also to meet the demand to meet CIC too.

So this replacement is practically not possible in near future unless Tughluq goes haywire again 😉
Now what is the biggest trouble posed by this magical ₹2000 notes?

Sudden jump in counterfeits.

As of Mar 2018, 18567 numbers of counterfeit ₹2000 notes detected by banking system alone.

Recall that ₹1000 notes introduced in 2000, took 8 years to cross 10K counterfeit mark
Because ₹2000 is every fake currency makers wet dream.

Small size than earlier ₹1000 notes w/o any addl security features, they can print double value!! To transport the same, they need less space!

Changing layout of currency will not make its counterfeit proof, sink in that
Third problem was hoarding or Emperor's favourite black money!!

RBI inside sources says that this ₹2000 are not circulating like lesser denominations. It became the hoarders favourite choice due to its size and high value!!!
So a large portion of ₹2000 notes follow one way traffic rule!!

It is going from RBI to hoarders den and not return to the banking system or circulation!!!

Magical solution of chips which can send signals from 100 ft below ground level is not of any help here 🤣
Yep...This is the interesting fate of the ONE AND ONLY ORIGINAL REFORM from the great brains of Emperor & Co.

We all know that rest are repackaging of UPA programmes!!
Foot note:

The only pragmatic replacement solution for ₹2000 notes is to bring back ₹1000 notes, which can be printed the entire quantity in 4-5 months and do a Rajan model replacement, rather than sucking it overnight!!

Some confused with this foot note.

So a further explanation.

IF at all they need to replace ₹2000, this can be ONLY be possible with the re-introduction of ₹1000 notes. No DeMon but gradual replacement

I believe that both can co-exist as a healthy mix of high denominations
As @IndianExpress also carried the story of stoppage of printing of ₹2000 notes, this thread needs further expansion.

Understand that ₹2000 notes reached its saturation limit in the mix of CIC. I said at present it can be a maximum of 3.65 billion here
RBI had that much amount of notes in their hand as of 31/03/2018 itself. Please see this from Annual Report 2017-18 of RBI.

See the intent and supply of ₹2000 notes for 2016-17 & 2017-18 > 3.504+0.151 = 3.655 billion.

These notes are not yet reached the soil notes category
Just like in 2017-18, this year too RBI may print around 0.2 billion ₹2000 notes to meet future currency demand &keep them in their stock pile, rather than issue the same for circulation. As we needs more lower denominations, its natural that ₹2000 notes printing get halted!
Either the highly placed SOURCE in the Finance Ministry is clueless about this or he is simply passing an information to create some sensation and confusion.

As our media stop using their analytical brains, dont expect asking some simple logical questions in this regard ;)
Then, as Parliament elections are around the corner, RBI need to pump more currency into circulation, so dont get panic that this 2000 is going to be undergo another DeMon even though conman Gurumurthy is around :P

Existing value of ₹2000 notes in circulation is 7.3 lakh crore!
Thank you all for the overwhelming response to this #thread.

Now a top MoF official endorses my prognosis on the hype over ₹2000 notes

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