Free Web NovelWith the groundbreaking ceremony for the Kaesong Industrial Complex just a week away, news of North Korea’s currency reform finally reached South Korea.
The public broadcaster was airing a special program on the subject.
“North Korea has carried out a currency reform. Let’s first watch the official announcement from North Korea, then discuss it.”
It seemed the station intended to bring in experts to talk about the currency reform.
The screen shifted from the anchor desk to a video clip.
Ri Chunhee, an announcer from Korean Central Television, appeared, delivering the Party’s position.
— Ahead of the historic North–South summit and the groundbreaking ceremony of the Kaesong Industrial Complex······.
Ri Chunhee’s distinctive cadence and piercing voice rang out through the broadcast.
She was the face of North Korea. Since the 1970s, she had served as an announcer, acting as the Kim family’s mouthpiece.
Now, instead of the Kim family, she would have to serve as the mouthpiece for Jang Songthaek—but her familiar voice remained unchanged.
— In this context, the beloved Comrade Jang Songthaek, Chairman of the State Affairs Commission, has decided to carry out a currency reform.
Ri Chunhee went on at length about the necessity of the reform.
North Korea announced a policy of exchanging 100 won of old currency for 1 won of new currency.
It was a denomination redenomination no different from those of the past.
However, there were differences compared to my previous life.
Previously, the amount that could be exchanged per household had been limited to 100,000 won. This time, there was no such limit.
Whether Jang Songthaek had accepted the advice of his advisory group or not, the contents of the reform were fairly reasonable.
A 100:1 redenomination. No limits on exchange amounts, and no questions asked about the source of the funds.
A reform plan focused solely on currency exchange.
But when it came to the dollar, control was absolute.
— The U.S. dollar and the Republic’s won will be fixed at a rate of 1:1000······.
North Korea fixed the exchange rate at 1 dollar to 1,000 won and imposed a mandatory exchange into the new currency during a one-month grace period.
In addition, all dollar transactions within the Republic were completely banned, and all Party-operated stores announced they would no longer accept dollars.
Instead, during the grace period, they offered the unprecedented incentive of exchanging at 1 dollar to 1,200 won.
At the same time, they also presented the stick: after the grace period, using dollars within the Republic could be punished by up to the death penalty.
Several other economic policies were announced alongside it.
One point worth noting was the introduction of a new tax on workers employed at the Kaesong Industrial Complex.
It appeared the Party planned to receive the wages first, deduct taxes, then convert the remainder into won before paying it out.
Although private property was not yet officially recognized, once taxation began, recognizing private property would become inevitable.
The current policies seemed intended to minimize friction before that point.
When the broadcast ended, the screen returned to the «N.o.v.e.l.i.g.h.t» anchor desk.
After watching the entire Korean Central Television clip, the host turned to the panelists.
“Assemblyman Lee Myungsoo. As someone who successfully led the inter-Korean summit and the Kaesong Industrial Complex project, we’re curious to hear your opinion. What do you think about this currency reform?”
Among the four panelists, Lee Myungsoo occupied his seat with confidence.
“I think it’s an excellent policy. Currency is the foundation of a nation’s economy. The economy only comes alive when money circulates. I expect this policy will bring money that’s been hidden away in people’s wardrobes back into the market. The fact that there’s no limit on exchange amounts and no inquiry into the source of funds, in my view, proves that this currency reform is free of political ulterior motives.”
Nodding at Lee Myungsoo’s opinion, the host posed a sharp follow-up.
“Even if they don’t ask about the source, the authorities will still know how much is being exchanged. If someone exchanges a very large amount, couldn’t that lead to disadvantages for that person?”
At the host’s point, Lee Myungsoo nodded.
“That’s not something we can ignore. However, most citizens probably don’t possess more than one million won. Excluding people who squirrel money away under the table. North Korea’s economic hardship is well known, isn’t it? This currency reform is one of the policies aimed at overcoming that hardship. I don’t believe that a policy implemented to revive the economy will end up harming ordinary, law-abiding citizens.”
Lee Myungsoo’s statement was orthodox.
In a North Korea suffering severe economic distress, it was realistically difficult for ordinary citizens to hold amounts exceeding one million won.
Those exchanging massive sums would almost certainly be high-ranking officials or people who had accumulated money through other means.
The host nodded in agreement and moved on to another question.
“However, currency reform is known to bring various side effects. For example, inflation caused by suddenly reduced denominations, or confusion during the period when old and new currency are used simultaneously. What are your thoughts on this, Assemblyman?”
Since Lee Myungsoo was the only well-known face among the panelists, it was inevitable that questions would concentrate on him.
“No policy is without side effects. What matters most is that North Korea’s won has already lost its value. At a time when they are trying to open up their economy, failing to carry out currency reform would only increase the chaos. It would be better for the North Korean people to minimize the side effects beforehand and help the system settle. If you look at the economic policies announced together, you can see that this currency reform was not implemented for political reasons, but as a policy aimed at economic revival.”
Lee Myungsoo spoke his thoughts plainly, without embellishment.
He was not an economic expert, so rather than focusing on potential problems, he concentrated on the positive effects that could be gained from the currency reform.
After hearing all of Lee Myungsoo’s remarks, the host turned the microphone to the panelists invited as economic experts.
“Professor Lee Minwoo, what do you think of Assemblyman Lee Myungsoo’s opinion?” freēwēbηovel.c૦m
Lee Minwoo, his hair streaked with white, was a professor who had taught economics at Korea National University for over thirty years.
“It’s reasonable, but Assemblyman Lee Myungsoo’s argument is overly optimistic.”
“Could you explain in what way?”
“I don’t know politics. I’m not interested in it either. But even if this becomes a political statement, I feel compelled to speak this time.”
After glancing at Lee Myungsoo and adjusting his glasses, Lee Minwoo continued.
“Frankly, it’s such a poor currency reform that I don’t even know where to begin listing the problems.”
Unlike Lee Myungsoo, Lee Minwoo spent a long time laying out the flaws of the reform.
“A peg to the dollar? Do you know that one of the biggest causes of the foreign exchange crisis that hit South Korea years ago was the fixed exchange rate? Not just Korea—Mexico, Thailand, Indonesia, Russia, Brazil, even Turkey have all abandoned fixed exchange rates over the past decade. Why do you think so many countries have given up fixed exchange rates in such a short time? Of course, fixed exchange rate systems do have advantages. But everyone now knows that the disadvantages outweigh them. Haven’t we just seen that clearly? And yet they choose a fixed exchange rate. While calling for economic opening, they choose a fixed exchange rate? I simply can’t understand it.”
As Lee Minwoo continued to put forward negative opinions and display his knowledge, Lee Myungsoo lowered his head slightly.
While checking a text message under the table, the host called out to him.
“Assemblyman Lee Myungsoo?”
At the call, Lee Myungsoo looked up.
“Yes.”
“Do you have any rebuttal to what the professor just said?”
“How could I possibly persuade Professor Lee Minwoo on economics? But economics is also a field where theory and practice differ. If implementing economic policy exactly as written in textbooks could make everyone happy, everyone would do it. Reality isn’t like that. Of course, I don’t differ much from the professor regarding fixed exchange rates. However, you have to understand that this is the only option available to a North Korea that has just decided to open its economy. In a country where the economy has collapsed to the point there’s nowhere left to fall, I believe there is no other choice. When it comes to North Korea, we need to look at reality, not textbooks.”
Lee Myungsoo’s remarks were quite aggressive. Lee Minwoo bristled and glared at him.
“Assemblyman, are you lecturing me right now?” frёeweɓηovel.coɱ
“Not at all. As I said earlier, how could I possibly beat you on economics? I’m simply saying that politically and realistically, there is no other answer.”
“Fine. Then let’s talk about South Korea’s currency reform in 1963 as an example. Back then, we implemented a reform in a way no different from what North Korea is doing now. What was the result? Economics isn’t something you can approach so simplistically.”
Lee Minwoo raised his voice, referring to the currency reform once carried out in South Korea.
In the end, the debate grew so heated that the host had to step in to restrain them.
“Please, both of you, calm down. Things seem to be getting a bit overheated. To summarize: Assemblyman Lee Myungsoo believes that while there are problems, there is no better alternative, whereas Professor Lee Minwoo believes that better options exist, but this choice was made for political reasons.”
The host hurriedly wrapped up and then posed the same question to the other panelists. All of them began sharing their opinions.
A short while later, the biggest issue of the special broadcast was presented to the panelists.
“There is also an argument that South Korea should begin discussing currency reform as well—that our currency denominations are too large compared to the size of our economy. We’d like to hear the panelists’ thoughts on this.”
Everyone was taken aback by the unexpected question, which wasn’t on the prepared list.
But unlike the others, Lee Myungsoo remained calm, as if he had known this question would come.
“First, let’s hear from the expert, Professor Lee Minwoo.”
Apparently not expecting to be targeted first, Lee Minwoo cleared his throat and spoke.
“I’m aware that there are economists who make such arguments. However, given our country’s characteristics, that’s absolutely impossible. A far better option would be to circulate high-denomination bills, which are currently under discussion, as soon as possible.”
“Why do you think so?”
“We’re a country that has already suffered side effects from multiple currency reforms. There’s no reason to add to the confusion by going through another one.”
Lee Minwoo firmly rejected the idea of currency reform.
“There are no advantages to currency reform that would justify enduring all those side effects. If the government announced it was going ahead with currency reform, I would lead the opposition myself.”
The other panelists all expressed negative views on currency reform in South Korea as well.
Even panelists who had praised North Korea’s currency reform flatly stated that South Korea’s reform wasn’t even worth discussing.
“Then lastly, let’s hear Assemblyman Lee Myungsoo’s thoughts.”
Lee Myungsoo smiled and met the host’s eyes.
“Well, I’ve never really thought about currency reform.”
His answer was vague. Not letting it slide, the host pressed him again.
“Are you saying you neither agree nor disagree?”
“I haven’t thought about it deeply, but I do somewhat agree with the argument that we should reduce the currency denomination.”
Because of the failure of the 1963 currency reform, it had become an unspoken rule for politicians in South Korea to avoid expressing opinions on currency reform.
But Lee Myungsoo shattered that unspoken rule without hesitation.
