In an attempt to curb down the flow of black money in the country, Pakistan followed neighbour, India’s footsteps when its Senate passed a resolution on Monday that sought the withdrawal on high denomination Rs 5000 currency notes from circulation. According to reports by the Dawn, Senator Usman Saif Ullah Khan of the Pakistan Muslim League (PML) put the resolution on the table, which was then backed by the majority of lawmakers in the Upper House of the Pakistani Senate. The resolution stated that the ban on the use of Rs 5000 notes would encourage the people to use bank accounts and reduce the size of unaccounted transactions.
Although the resolution also added that the withdrawal of the Rs 5000 currency notes would take place within a period of 3-5 years so that a sudden void does not get created in the market. It was however reported that Law Minister Zahid Hamid said that the ban on Rs 5000 notes would create a major crisis in the market and the people, in turn, would resort to using of foreign currencies in the absence of high denomination notes. Hamid said that there were 3.4 trillion notes in circulation at the moment in Pakistan, out of which 1.02 trillion notes were of Rs 5000 currency notes.
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Pakistan is the 3rd country which had arguably followed India’s footsteps to demonetisation after Australia and Venezuela. Although, the Venezuelan economy was in a dire need for reform and demonetisation seemed like a plausible step in the state. The country had however withdrawn the law following widespread protests. India meanwhile had jumped into the demonetisation drive on November 8, 2016, when PM Narendra Modi had announced a ban on the use of Rs 500 and Rs 1000 notes. He had given a time limit of 50 days for the people to deposit the old currency notes.