Financial unrest in North Korea

North Korean currency reform upsets social balance

by Brian Lapuz

A top official of the North Korean Juche dictatorship apologized to the population, in Pyongyang, on February 1, after a failed economic reform, which sparked unrest across the country.
In an attempt to get rid of private wealth and inflation, the N. Korean regime imposed market restrictions in November of last year. Namely, the people had one week to exchange the old won, the N. Korean currency, for the new won at a rate of 100:1, creating chaos in the fledgling market.
On February 1, The Chosun Ilbo, a South Korean newspaper, reported that a North Korean source told them that Premier Kim Yong-il, not to be confused with Kim Jong-il, stated, “I sincerely apologize for having caused great pain to the people by recklessly enforcing the latest currency reform withouth making sufficient preparations or considering the circumstances.”
The currency reform consisted of a cap on the amount of old currency notes N. Koreans could trade for the new won. This left many people with useless old wons. The reform also cause comodity prices to rise dramatically.

Foreign currency was also banned in order to discourage black market trading. There have also been reports of starvation in the North-Eastern region of the country.

The Daily NK, a newspaper run by opposition activists to the dictatorship, reports that there have been clashes between people and the People’s Safety Agency (PSA), in response to the PSA cracking down on food smugglers.
Also on February 1, a Daily NK source said, “A group of [PSA] agents who had just finished doing the rounds of jangmadang and alley markets in Naengcheon-dong, Haksu-dong,  and Cheongok-ri in Pyongsung were attacked by a number of people…”
As a result, the Finance Chief, Pak Nam-Gi, who was the head of the unpopular reforms, was dismissed.
Earlier this month, N. Korean authorities started to lift these market restrictions in order to avoid another food crisis, like in the 1990s.


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