Journal of Hotel and Business Management
Open Access

Abstract

The Effect of Demonetization on Ethiopian Economy: A Review Paper

Getachew Wollie

Demonetization is an act of denying the legal tender status of old banknotes by introducing a new one. The Ethiopian government has announced demonetization of old currencies on September 14, 2020 by having an aim to gather informally circulating currencies which are outside of the financial institutions; to curb illegal activities (like corruption and contraband); to stem rising inflation and also to avoid currency shortage which confront financial institutions. This article is a preliminary assessment review based on secondary information obtained from newspaper, magazines, Mass Medias, websites, periodic reports from National bank and Central Statistical Agency of Ethiopia and also scholars’ analysis. The paper ensured that, demonetization has failed to stabilize raise in the general price of commodities. It also creates cash shortage which has adverse effect on the day to day life of peoples. It is better that, the National Bank of Ethiopia will tries to design appropriate policy packages which encourage peoples to deposit their money and make transaction at a bank for a long period of time. In addition, the government should strengthen the controlling system to curb money trafficking, here and there printing of forged money and contraband.

Published Date: 2022-08-05;