|Quoting NoUFO (Reply 6):|
Are they "just" cutting off two zero's from the bills or from the price tags as well? If the latter is the case, people would not have to fear losses, at the same time, the re-issue would not spoil the unofficial economy as the article suggests, or am I completely wrong?
The objective of this move is to get rid of "too much" money among the population and reduce its purchase power, which is unwelcome in the economy of shortege of everything and which creates too much demand which the state is not able to saturate.
The catch is that technically they "just" erase two zeros from the bill but in reality the prices in state-run shops may (or may not) be adjusted in a symmetrical manner, however prices on black and non-state run markets which is tolerated in NK
after the famine in 2000 are governed by market forces (early reports say that the price of rice already went up 15x).
Another catch may be that there is usually different ratio used for converison of cash and different ratio used for money deposited on accounts and/or there is a certain ceiling set which will let people exchange only certain amount of their savings, the rest at less favorable rate or will not let them exchange at all, e.g. first xy thousand won converted at 1000:1 the rest e.g. at 100,000:1). Supposedly in NK
the limit for exchange of old wons for new ones is 100,000 won per household - whether that means household as we understand it i.e. parents+kids or household in broader sense as it is understood in Korea it doesn't say.
BTW, this is what communists did in Czechoslovakia in 1953, which resulted in us being kicked out of the IMF
koruna being no longer convertible (the formula was for cash: 1-300 CSK exchanged at 5:1, anything above 300CSK at 50:1; deposited money: 1-5000 CSK 5:1, 5k-10k CSK at 6.25:1, 10k-20k CSK at 10:1, 20k-50k at 25:1, anything above 50k CSK converted at 30:1).
In North Korea this is already a fifth such state-organized robbery. First was in 1947 followed by 1959, 1979, 1992 and 2009.
By all means you are more than welcome to use spellcheck...