Great technological challenges of the 21st Century: the demonetization of India

The monetary policy experts’ assessment of President Narendra Modi’s demonetization of India has been mixed, but there is no doubt that this is a project with a very high level of complexity.

Of India’s population of 1.3 billion people, more than 1 billion have an Aadhaar ID card issued by the central government, which collects their biometric data (fingerprint, iris, and facial biometry) along with demographic data, is stored in a centralized databank, giving citizens a unique twelve-digit number, the largest national identification project of its kind in history.

Furthermore, 400 million of the country’s 1.1 billion bank accounts are already linked to Aadhaar’s identification numbers, and the government intends to register each and every one soon, in a bid to combat counterfeit bills, money laundering, corruption and financing of terrorist activities.

The demonetization of the country reached a peak on November 8, when Narendra Modi spoke to the nation in a televised address to say that 500 and 1,000 rupee bills, which make up about 80% of all money in circulation, were being withdrawn within hours and would have to be exchanged for new banknotes or be deposited in a bank account before December 30th. The radical measure, which prompted some dissent and huge…