"This revolutionary step will curb black money, corruption and terrorism (funding) to a large extent," Mr Hazare told news agency PTI.
"The previous governments never showed the will to crackdown on black money. The present dispensation has taken a bold step and this will strengthen the democracy," he said.
On the other hand, Aam Aadmi Party chief Arvind Kejriwal attacked Prime Minister Narendra Modi for demonetising Rs. 500 and Rs. 1,000 notes. He insisted that this won't curb black money.
Mr Kejriwal also went on to allege that the BJP and its "friends" were informed about the demonetisation of high value currency "a week before" the move was put in place.
Pointing out "discrepencies" in funding of political parties, Anna Hazare said the next course of action for the government should be to "clean up" the election process.
Mr Hazare alleged that almost all political parties accept huge cash donations for elections but furnish receipts (for amounts below Rs 20,000) against donors to avoid coming under the scanner of Income Tax officials and RTI.
"Hence, it is time the government ensures transparency in the poll process to make it more credible," he said.
However, he cautioned that adequate safeguards need to be taken before ushering in the new currency regime.