5 Rupees (Biju Patnaik) – India

In 2016, India's currency situation was dominated by a single, seismic event: the demonetization of ₹500 and ₹1,000 banknotes, announced by Prime Minister Narendra Modi on November 8th. This policy, which rendered 86% of the currency in circulation by value invalid overnight, was presented as a radical surgical strike against "black money," counterfeit currency, and terror financing. The move aimed to purge illicit cash from the economy, push India towards digital transactions, and widen the tax net by bringing unaccounted wealth into the formal banking system.

The immediate aftermath was one of significant disruption and a severe liquidity crunch. Long queues formed outside banks and ATMs as citizens scrambled to exchange old notes or withdraw the newly introduced ₹500 and ₹2,000 denominations, the supply of which was initially inadequate. The cash-dependent informal sector, which constituted a large part of the economy, was severely impacted, affecting daily wage earners, small traders, and farmers. While the government argued it was a necessary short-term pain for long-term gain, the move sparked intense public debate and criticism over its planning, execution, and the disproportionate burden on ordinary citizens.

By the end of 2016, the economy was still grappling with demonetization's effects. Although a large portion of the invalidated currency was returned to the banking system—raising questions about the primary objective of trapping black money—the government highlighted successes like a surge in digital payments and expanded financial inclusion. However, the full economic impact, including a slowdown in GDP growth in subsequent quarters, was yet to be fully quantified. The year concluded with the currency situation in a state of transition, marked by a profound shock to the system and an uncertain path towards its intended structural benefits.