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(dē'mŏn'ətəzā`shən), governmental withdrawal of the monetary quality from particular coinage or precious metal. By demonetization former money is no longer legal tender, although in certain cases it may still be used as money of exchange, i.e., the actual metallic value may sometimes be accepted in discharge of indebtedness. However, such was not the case with regard to the demonetization (1933) of U.S. gold. The demonetization law stipulated that gold may not lawfully be used in domestic exchange, although it may be purchased for shipment abroad. Other instances of demonetization were the American conversion (1873) of silver into money of exchange and the similar British conversion (1889) of pre-Victorian gold coins. See moneymoney,
term that refers to two concepts: the abstract unit of account in terms of which the value of goods, services, and obligations can be compared; and anything that is widely established as a means of payment.
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the discontinuance by the state of a coin as a legal means of payment and circulating medium. The coin subject to demonetization retains only the value of the amount of metal it contains.

Demonetization is coordinated with a change of the monetary system; for instance, it is conducted when the metal from which the coin was made has depreciated and a new currency metal is introduced. Thus, the depreciation of the value of copper led to demonetization of copper coins. The continuous depreciation of silver in the 19th century compelled almost all countries to demonetize silver coins and introduce gold currency. In 1961 in the USSR, as a result of the change of the price measuring unit and the issue of new paper money, a demonetization was effected: coins of 5 kopeks and higher were removed from circulation, whereas coins of 1, 2, and 3 kopeks preserved their legal purchasing power. Coins of the latter category are used along with new coins of the same denominations.

A demonetization may also be made for political reasons: for example, the demonetization of coins of tsarist mintage in the USSR after the Great October Socialist Revolution.

References in periodicals archive ?
The government could not produce any credible evidence to prove that counterfeit currency and terror financing could be substantially reduced as a result of demonetization.
On the other hand, the Association of Bhutanese Industries (ABI) General Secretary, Jochu Thinley said that the INR cash shortage in Bhutan due to demonetization in India is affecting Bhutan's industries because from the Indian Rupee account that industries maintain, they were earlier allowed to withdraw 10 percent as cash to pay transporters, labourers, toll tax, fuel, 'goonda tax', local syndicate payments, etc.
Besides the far reaching impact on the economy, the process of demonetization has also taken a toll on the cultural and social fabric of Indian society.
IC: The logjam in Parliament over demonetization continued and winter session ended without much work.
In the article, titled 'I Need to Speak Up Now', Sinha on Wednesday took on the Centre over its poor economic record and said that demonetization has proved to be an "unmitigated economic disaster" and that the Goods and Services Tax (GST) was a "badly conceived and poorly implemented" havoc.
Anju Grover spoke to Congress Member of Parliament K C Venugopal on logjam in Parliament, opposition's responsibility and ofcourse strategy on demonetization.
Summary: New Delhi [India], Sept 1 (ANI): The Congress party slammed the government over demonetization, terming the move as "the biggest failure" and added that Prime Minister Narendra Modi should apologize to the people of India.
5 -- Long term impact of demonetization on the economic growth is our big concern: Parliamentarian N K Premchandran
The flushing out of black money and conversion of the non-formal economy into a formal economy to expand the tax base were among the main objectives of demonetization.
India's economic growth story has become the subject of heated debate in political and economic circles after demonetization.
54 lakh crore in the two months post demonetization between November 9 to Decemeber 31.