Korea Bank Performs Denomination from 2003

From the next year, denomination lowing the currency unit will be preformed actively and new currency will be used from 2005. If denomination of 1 to 100 is practiced, the present currency of 10,000 won will be converted into 100 won in new currency.

However a part of government and bank industry are anxious that the denomination will cause a lot of confuse and indicated to issue the currency of 100,000 won is required urgently. So it may appear as the subject of lot of dispute.

At 10th, The Bank of Korea announced that 5.16 million cash checks are issued every day and its annual cost is about 600 billion won. So the bank will prepare a ‘denomination’ plan by this year and finalize through public hearing and discuss with government in 2003.

The Korea Bank explained that if the final plan is decided, new currency would be used from 2005 after 2 years preparation.

Even if new currency is used, the old one will be used concurrently for 2-3 years and when a person changes old one for new one anonymously, Additionally, Double price system will be performed.

Park Seung, the President of Korea emphasized “ As the unit of domestic currency is much higher compared to international currencies such as dollars, social and psychological costs become bigger and bigger.” And added “To reduce the unit is my first aim during the position in the office.” Park Seung, the President of Korea indicated that only two countries, Korea and Turkey, of 30 member countries of OECD express currency rate for US dollars in more than 4 digit numbers.

If denomination is practiced, the currency unit becomes reduces and it does not need to issue high value currency.

According to Korea Bank, in the first half of this year, 5.16 million cash checks were issued daily and increased by 29.3 % compared to 1999 of 4.46 million cash checks.

In case of cash checks of 100,000 won, 4.24 million cash checks are issued daily and increased by 29.3% compared to 1999 of 3.29 million cash checks and the portion of total cash checks issued increased to 82.2% by 8.7%.

The total expenses concerned cash checks for the first half of this year is estimated 280.8 billion and 600 billion won annually.

Someone insist that if currency unit changes, there may be a lot of confuse in the early stage of the denomination. So firstly, high value currency should be issued. Therefore, the practice of denomination plan will be decided by the next government`s point of view. Denomination and issue of high value currency can be performed by Korea Bank after government`s approval.

Kwu-Jin Lim mhjh22@donga.com