North Korean Monetary History

From the Korea Times: 

The Currency of Currency
By Andrei Lankov

Communists have always professed to abolish money _ and for a while they took the promise seriously. The first years of the Communist rule in Russia were marked by bold experiments aimed at the abolition of the currency which was to be replaced by some “direct labor exchanges.” However, the ensuing bitter experience was a harsh lesson, and so in later eras Communist regimes only paid lip service to the anti-monetary rhetoric. They did not reject their earlier promises to completely do away with money, but this was to be done at some unspecified point in a distant future.

Thus, the establishment of Communist governments often began with currency reform _ and North Korea was no exception to this rule.

For the first few years after Liberation, the North Koreans continued to use Japanese banknotes and coins. However, in December 1947, the nascent Communist authorities launched a currency reform. Needless to say, this was done with complete Soviet endorsement, and the practical management of the reform was entrusted to a Soviet-Korean financial expert, Kim Chan.

Within the week from Dec. 6 to 12, 1947, all the old banknotes had to be exchanged for new ones. According to then contemporary Soviet reports, trade on the Korean markets came briefly to a complete halt as shopkeepers panicked. Only in January, with the new banknotes, did shops resume normal trade.

The 1947 banknotes were printed in the USSR. There were four denominations; 1, 5, 10 and 100 won. These early banknotes were peculiar in many regards. First of all, they were issued before the official proclamation of the DPRK _ and thus did not bear the name of the state which issued them. They only carried the inscriptions ‘Democratic Korea’ and the name of the issuing institution _ “the Central Bank of North Korea.” Another peculiarity was the use of Chinese characters, soon to be banished from North Korean life.

In 1949, the banknotes were augmented with currency for small transactions. This “small change” was issued not as coins, but as paper money _ with values of 15, 20, and 50 chon (a chon is 1/100 of the North Korean won). However, rampant inflation soon made these small banknotes unusable.

The Korean War created complete havoc with the currency systems of both Koreas. In February 1959 Pyongyang launched a new currency reform. This time, the “old” won were exchanged for the “new” at the rate of 100:1 (what used to be a hundred won became one won). This was necessary to encourage stability and make the Korean currency more manageable. Indeed, until the dramatic changes which followed the Great Famine of 1996-1999, it had been easier to handle the North Korean currency than its South Korean counterpart: in the North nobody had to operate with five- or six-digit numbers for every small transaction!

The 1959 banknotes depicted industrial and agricultural landscapes. As a rule the front side of each banknote showed something industrial, while the reverse side had largely agricultural topics. There were six types of the banknotes, valued at 50 chon (0.5 won), and 1, 5, 10, 50, and 100 won. In addition, the first North Korean metal coins were issued as well _ with denominations of 1, 5, and 10 chon (50 chon coins were subsequently issued as well). The coins were made of a light aluminium-based alloy, and they all had a similar design: the DPRK’s coat of arms on the reverse, and the denomination on the front. In this respect the coins largely followed the patterns of the coinage in other Communist countries.

The next reforms took place in 1979. While the old coins remained in circulation, banknotes were replaced. The new banknotes (once again, with the values of 1, 5, 10, 50, and 100 won) had a dramatic and highly politicized design. The 100-won banknote was decorated with a portrait of Kim Il Sung, who thus became the second Korean leader to be depicted on a Korean banknote in his lifetime. The dubious honor of being the first goes to the South Korean President Syngman Rhee, who put his face on South Korean banknotes as early as 1950. The reverse of the 1979 100-won banknote depicted Kim Il Song’s childhood home in Mangyongdae.

The 50-won banknote had representations of a worker, a farmer (the only female in the picture), a soldier, and an intellectual (the latter lurking in the back); all of whom were holding high the symbolic torch of Kim Il-sung’s chuche ideas.

The 1979 banknotes remained in use until 1992 when another currency reform introduced the present system of Korean coins and banknotes. But that is another story…


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