North Koreans in shock as cash is 'banned'
All cash transactions in North Korea have been frozen after the Government’s shock decision to revalue the won currency in an effort to crack down on the country’s burgeoning free-market economy.
…enterprises and services based on cash, including markets, long-distance bus services, barbers, saunas and bath houses, have been suspended until the revaluation is completed next week.
There was confusion after the announcement of the measure, which requires North Koreans to swap existing won notes with new ones at an exchange rate of one to 100, knocking two zeroes off their value. There is a cap of 100,000 won [$40] per family, which means that anyone with significant holdings of cash will have their savings wiped out.
…The announcement was made on Monday via a closed cable broadcasting system which is piped into all North Korean homes, and reserved for public announcements and state propaganda.
It has not been reported in the state media, but it was confirmed the following day in briefings to foreign diplomats in Pyongyang who were summoned to the country’s foreign ministry at 20 minutes' notice.
…Reliable information about the North Korean economy is difficult to come by, but the move appears to have two purposes. One is to control price inflation by limiting the amount of cash in circulation. The other is to destroy the fortunes of black-market traders, money changers, and others who have been profiting from North Korea’s nascent free-market economy.
…The official exchange rate is 190 won to the euro, but the black market rate is 2,000 won and upwards.
Richard Lloyd Parry