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move is unprecedented
According to the world newspapers, The demonetizations or radical recall, redenominations, replacements of currencies by governments have been in response to
the hyper inflations. India newspapers have reported many such cases of complete
withdrawal of notes from circulation being resorted to. The primary and main purpose
has always been to control the runaway inflation and accompanying the loss of faith
among investors and the larger public in the domestic currency.
The best example world newspapers have is of Germany under the Weimar Republic.
On November 20, 1923, they introduced a new currency ,the Rentenmark and affirmed
all old Reichsmark notes to be no longer legal tender. This took place because domestic
prices were already 14 times their 1913 levels in the mid 1921 and 1,475 times towards
end of 1922. They had skyrocketed to 1,422,900,000,000 times by November next year.
Just as this happened, the currency lost value by the minute, so people rushed to spend
their wages the exact moment they received them.When the credibility got restored,
inflation fell and the run on the currency, too, ended.