I don't study economics, but I do study terrorism, and 'demonetization will end terrorism finance' was one of the most ridiculous bogeys of the entire exercise. #DemonetisationAnniversary
The whole idea of fighting terror finance has been an abject failure in global discourse, not just in India's case. A shift to hawala movements have worked for global terror groups.
Terror finance moved away from intl financial systems long ago. Currency does not matter that much. Terror attacks are not 'expensive', not anymore anyway.
Using intl financial institutions are helpful in sanctions, such as against Iran, not against insurgency movements. FATF has failed to curtail the latter.
Terror funding very rarely enters official financial systems, and we have seen how translucent these systems are in #PanamaPapers and #ParadisePapers
For perspective, here is how ISIS funded its brutal insurgency. Very little of these ever entered intl financial systems.
Use of petty cash on ground situations is an issue, but that does not 'end' or 'fight' terror/cross-border terrorism. Its not even a band-aid.
Every terror system employs different methods of finance, from cash for transaction purchases to bitcoin for intra-border activities. Nullifying two denominations of currency doesnt end any of this.
Lastly, contrary to popular belief, all money used for terror is not illegal. Terror groups do tap into legal funds. A man running a shop is legal money, whether he uses it for terror becomes an intelligence issue.
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