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A Currency is "Reevaluated"

North Korean wonEconomic activity inside North Korea has reportedly ground to a halt following a government announcement that it is devaluing its currency at a rate of 100:1.

There were reports of public outrage and confusion after the announcement of the measure, which requires North Koreans to swap existing won notes for new ones at an exchange rate of one to 100 — effectively knocking two zeroes off their value. Because of a cap of 100,000 won per family (£475 at the official exchange rate), anyone with significant holdings of cash will have their savings wiped out.

The move is seen as an effort to quash small businesses and private enterprises which have proliferated in the unofficial economy. As many as 30,000 vendors are believed to operate in a market outside the capital, Pyongyang, and many of them had accumulated substantial cash reserves. This move effectively confiscates that cash.

Analysts do not foresee any direct economic repercussions outside the country, but it does serve as a reminder that many other world currencies are, like the North Korean won, “fiat money

Links at the Times Online, Wall Street Journal, and Economist. Photo credit.

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Date
December 2nd, 2009

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Stranger to the World

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1 Comments


  1. Joshua Holmes

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