“I promise to pay the bearer the sum of five hundred rupees,” reads the motif of the 500 rupee note. This promise turned hollow overnight, as 86% of India’s cash stock was declared worthless by the Prime Minister.
With long queues at banks and ATMs across the country, demonetization has turned the base problem of fiat currency into a billion lived experiences. People have learned that money is a store of value only as long as the authorities consider it one. But the history of Indian currency has many moments where stores of value became stores of nothing – though not necessarily overnight.
Muhammad bin Tuqhlaq switched from a gold and silver based currency to one of brass and copper, in 1330 A.D. The coins were easily forged by skilled goldsmiths, however, and led to a flood of duplicates that dropped their value dramatically. By 1333 A.D., the new currencies were abolished.
It was in 1540 A.D. that the first official ‘Rupiya’ was minted – this time by Sher Shah Suri of the Sur dynasty. A tri-metal series of gold, silver and copper coins, it would become the standard currency of much of the subcontinent over the next few centuries.
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