Explanation:

 Demonetization is the act of stripping a currency unit of its status as legal tender. It occurs whenever there is a change of national currency: The current form or forms of money is pulled from circulation and retired, often to be replaced with new notes or coins. Sometimes, a country completely replaces the old currency with new currency.
There are multiple reasons why nations demonetize their local units of currency:

• to combat inflation
• to combat corruption and crime (counterfeiting, tax evasion)
• to discourage a cash-dependent economy
• to facilitate trade
Dramatic Examples of Demonetization
The Coinage Act of 1873 demonetized silver as the legal tender of the United States, in favor of fully adopting the gold standard.
An example of demonetization for trade purposes occurred when the nations of the European Union officially began to use the euro as their everyday currencies in 2002. When the physical euro bills and coins were introduced, the old national currencies, such as the German mark, the French franc and the Italian lira were demonetized. However, these varied currencies remained convertible into Euros at fixed exchange rates for a while to assure a smooth transition.

In 2015, the Zimbabwean government demonetized its dollar as a way to combat the country’s hyperinflation, which was recorded at 231,000,000%. The three-month process involved expunging the Zimbabwean dollar from the country’s financial system and solidifying the U.S. dollar, the Botswana pula and the South African rand as the country’s legal tender in a bid to stabilize the economy.

In 2016, the Indian government decided to demonetize the 500- and 1000- rupee notes, the two biggest denominations in its currency system; these notes accounted for 86% of the country’s circulating cash.The move aimed at reducing cash dependence of Indian economy and to combat money laundering, counterfeiting and terror financing.