The announcement led to a big jump in gold bullion sales.
The 2,000-rupee note will remain legal tender, but they will have to be deposited or exchanged for smaller denominations by Sept. 30.
The 2,000 rupee note ($24.19) is the largest currency denomination in India. According to Reuters, they make up about 10.8% of the currency in circulation.
T.V Somanathan, the top official at the Indian Finance Ministry, said confiscation of the 2,000 rupee notes wouldn't cause any disruptions "either in normal life or in the economy."
His assurances fall flat given history.
We've seen this play before. The Indian government announced a surprise demonetization policy in the fall of 2016 meant to drive so-called black money out of the shadows and declared that all of the 1,000 and 500-rupee notes then in circulation would no longer be valid. The suddenly worthless notes made up 86% of the currency in circulation in the country at the time. The move made virtually all of the cash in India valueless.
The government produced new 500 and 2,000-rupee notes to replace the old currency.
Now the government is pulling those 2,000-rupee notes out of circulation.