Demonetization is not the same thing as stablecoins. Countries are allowed to withdraw certain bank note denominations and it's been done many times in the past.
In most countries where demonetization occurs, the central bank continues to accept demonetized currency for the foreseeable future, exchanging it for valid denominations at par.
The government of India came down hard on corruption and tax evasion, more politically motivated than anything. But then people voted for it and the majority supported the process. If they didn't, the government would have been discarded in the next election.
I visited India during that whole mess and one of the first things I saw after I left the airport in Hyderabad was massive lines of people waiting at every single ATM (that still had cash anyway). Trying to change out USD was literally impossible unless you were willing to accept large notes - which were themselves pretty much useless. Good luck getting a street vendor to accept a ₹2000 bill.