Data: Demonetisation failed to make India a ‘less cash’ society

The chart plots currency in circulation (CIC) as a share of broad money (M3) —henceforth, CIC/M3—using monthly data from January 2012 to May 2018.

The long left “tail” makes it evident that CIC/M3 had settled into an equilibrium in the range of 0.14—with CIC equal to about 14% of the stock of broad money. The demonetisation shock in November 2016 saw CIC/M3 plunge to as low as about 0.08 within a month, not surprising when fully 86% of the currency stock was invalidated by the stroke of a pen.

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