Demonetization is the act of stripping a currency unit of its status as legal tender. Demonetization is necessary whenever there is a change of national currency. The old unit of currency must be retired and replaced with a new currency unit.

A recent example of demonetization occurred when the nations of the European Monetary Union adopted the euro. In order to switch to the euro, authorities first fixed exchange rates for the varied national currencies into euros. When the euro was introduced, the old national currencies were demonetized. However, the old currencies remained convertible into euros for a while so that a smooth transition through demonetization would be assured.

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  • demonetization — de*mon e*ti*za tion, n. The act of demonetizing, or the condition of being demonetized; specificially, the declaration by a government that something (e.g. gold or silver) is no longer the legal tender of a country; as, the demonetization of gold …   The Collaborative International Dictionary of English

  • demonetization — 1852, from Fr. démonétisation, from démonetiser (see DEMONETIZE (Cf. demonetize)) …   Etymology dictionary

  • demonetization — (Amer.) de·mon·e·ti·za·tion || diː‚mÊŒnɪtaɪ zeɪʃn n. act of removing money from circulation (also demonetisation) …   English contemporary dictionary

  • demonetization — demonetize de‧mon‧e‧tize [ˌdiːˈmʌntaɪz ǁ ˈmɑːn ] also demonetise verb [transitive] FINANCE to no longer allow the use of a particular coin or banknote as money: • The Philippines central bank demonetized the paper money printed during Ferdinand… …   Financial and business terms

  • Demonetization —    (1964, 1985, 1987)    An order of the government that revokes the legal tender status of currency notes, rendering them worthless. Burma under General Ne Win experienced three demonetizations: in May 1964, November 1985, and September 1987.… …   Historical Dictionary of Burma (Myanmar)

  • demonetization — demonetize (also demonetise) ► VERB ▪ deprive (a coin or precious metal) of its status as money. DERIVATIVES demonetization noun. ORIGIN French démonétiser, from Latin moneta money …   English terms dictionary

  • demonetization — noun see demonetize …   New Collegiate Dictionary

  • demonetization — See demonetize. * * * …   Universalium

  • demonetization — noun The act or process of demonetizing …   Wiktionary

  • demonetization — de·monetization …   English syllables

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