New Delhi: Lawrence Summers, a former United States Treasury Secretary and Chief Economist of the World Bank, has written that demonetization will not have any lasting benefit without new measures to combat corruption.
In a blog post on larrysummers.com, the economist, who was the President of Harvard University from 2001-06 and portrayed as such in the Hollywood film The Social Network, wrote that the move was the most sweeping change in currency policy that has occurred anywhere in the world in decades.
However, Summers and co-author Natasha Sarin wrote that “We strongly suspect that those with the largest amount of ill-gotten gain do not hold their wealth in cash but instead have long since converted it into foreign exchange, gold, bitcoin or some other store of value. So it is petty fortunes, not the hugest and most problematic ones, that are being targeted.”
Also “We were not enthusiastic previously about the idea of withdrawing existing notes from circulation because we judged the costs to exceed the benefits. The ongoing chaos in India and the resulting loss of trust in government fortify us in this judgement.”
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