Demonetisation: An Empirical Study Determining the Factors Affecting a Demonetisation Success

Demonetization is the withdrawal of a national currency from circulation. This method is used worldwide to control inflation, limit liquidity, and combat the accumulation of funds. Various economic and financial factors influence the success or failure of demonetization. These include currency denomination, the ratio of the demonetized currency to the current currency in circulation, and the ratio to GDP per capita. The aim of the study is to identify the key factors affecting demonetization. The analysis is based on the example of India in 2016 and is supplemented by a literature review. Twelve factors influencing the process have been studied, and their relationship with success of demonetization has been established using statistical analysis with the ordinal logistic regression method in Python. Economic indicators have been identified that can help countries carry out demonetization without causing social chaos. An equation for assessing the success of demonetization has also been derived. The article recommends careful preparation for this process, competent planning, and competent execution.

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