Background Information
The official currency of North Korea is the North Korean won. The name ‘won’ is derived from the former Korean unit of currency, the ‘hwan’, which was in use from 1902 to 1910. The North Korean won was introduced in 1947, replacing the North Korean won at par. North Koreans are not allowed to openly exchange foreign currencies and rely solely on the North Korean won. The won is divided into 100 North Korean chon and is available in both paper notes and coins.
The North Korean won is not widely accepted outside of North Korea. In some countries, it can be exchanged for foreign currencies at various money changers, but the rate of exchange is typically very unfavorable. The official exchange rate of the North Korean won is set by the government and is not market-determined. As a result, it is typically much lower than the rates offered in the black market or in China.
In addition to the North Korean won, the Bank of Pyongyang, North Korea’s central bank, has issued several other forms of currency, including the United Nations (UN) won and the People’s Bank won. These are not circulated as widely as the North Korean won and are not accepted outside of North Korea.
Value of North Korean Won
The North Korean won is extremely weak compared to other currencies. As of late 2020, one US dollar was equivalent to about 923 North Korean won. This means that the North Korean won is significantly more valuable than the US dollar. The value of the North Korean won against the US dollar has been relatively stable since the 1990s, meaning that North Korean citizens can depend on their currency to retain its value over time.
Nevertheless, the North Korean won remains weak compared to other currencies. The weak currency has had a significant impact on the country’s economy. Prices of goods are inflated, making it difficult for North Koreans to purchase items they need. In addition, it is difficult for North Korean citizens to save money, as their wages have remained stagnant over the past several decades.
The North Korean government has implemented a number of economic reforms in recent years in an effort to prop up the value of the North Korean won. The goal of these reforms is to create an environment where citizens can save money and take advantage of economic opportunities. However, many of these reforms have had limited success and the North Korean won remains weak.
Limitations on Currency Use
In addition to its weak value, the North Korean won is subject to tight restrictions. North Koreans are not allowed to exchange their currency for foreign currencies, nor are they allowed to openly purchase goods from foreigners. North Koreans also face other limitations on their ability to spend money. For example, purchases of luxury items, such as computers and electronics, are banned. In addition, citizens must obtain special permission from the government before they can open a bank account.
Many North Korean citizens have bypassed these restrictions by exchanging their won for Chinese yuan in the black market. This has led to an influx of yuan into the North Korean economy, which has had an inflationary impact on prices and further devalued the North Korean won. As a result, black market activity has become an important source of income for many North Koreans.
The North Korean government has attempted to crack down on black market activity. It has also attempted to impose limits on the types of goods that can be imported into the country in an effort to control prices and prevent black market activity. Nevertheless, North Koreans continue to find ways to get their hands on foreign currencies.
International Trade and the North Korean Won
The North Korean won is accepted in some international trade transactions. North Korea has a bilateral trade agreement with China, which allows for the exchange of goods and services. In addition, North Korea has opened up its economy to foreign investment, allowing for the purchase of North Korean assets. North Koreans also use Chinese yuan and US dollars to buy and sell goods from abroad.
Despite these limited uses, the North Korean won is still not widely accepted outside of the country. The government has attempted to make the currency more attractive to foreign investors by introducing the won-denominated securities, such as treasury bills and bonds, but so far these have failed to draw significant foreign interest.
As a result, the North Korean won is largely isolated from the global financial system and does not attract much foreign investment. International sanctions have also made it difficult for North Korea to access world markets, further limiting the use of the North Korean won.
North Korea’s Crypto Currency
In 2019, North Korea unveiled its own crypto currency, the ‘Koryeon’. The Koryeon is similar to Bitcoin and other crypto currencies, but it is not available to the public. Rather, it is a digital currency developed by the North Korean government in an effort to bypass international sanctions and access the world economy.
The Koryeon is a digital currency, rather than a fiat currency, meaning that it is not backed by a physical commodity such as gold or silver. It is encrypted using blockchain technology and the government has full control over its issuance and circulation. The North Korean government claims that the Koryeon will be used to facilitate global trade and will increase the autonomy of North Koreans.
While the Koryeon is not yet widely used, it is a potential sign of things to come. North Korea may be looking to the world of crypto currencies as a way to increase its access to the global economy, bypassing international sanctions.
Conclusion
The North Korean won is the official currency of North Korea. It is a weak currency, with a value of around 923 won to the US dollar as of late 2020. It is also subject to tight restrictions, making it difficult for North Koreans to save money and purchase goods. North Koreans have resorted to exchanging their currency for foreign currencies in the black market, but this has had an inflationary impact on prices.
The North Korean won is not accepted outside of the country, making it difficult for North Korea to access the world economy. The government has introduced its own crypto currency, the ‘Koryeon’, in a bid to bypass international sanctions and access world markets. Only time will tell if the Koryeon is successful in its mission.
North Korea and International Sanctions
International sanctions have been imposed on North Korea in response to its nuclear weapons program and human rights abuses. These sanctions have had a significant impact on North Korea’s economy. They have limited North Korea’s access to the global financial system and made it difficult for the country to engage in international trade.
The sanctions have also limited the flow of foreign currency into North Korea. As a result, North Koreans have been unable to convert their own currency into foreign currencies, leading to a severe shortage of foreign currency in the country. This has made it difficult for North Koreans to save money and purchase goods, further exacerbating the economic crisis in the country.
The North Korean government has attempted to counter the effects of the sanctions by introducing new economic reforms and by expanding its trade relations with China. The government has also introduced its own crypto currency, the Koryeon, in an effort to bypass international sanctions and access world markets. However, it remains to be seen if the Koryeon will be successful in its mission.
North Korea’s Currency System
The North Korean currency system is complex and centralized. The North Korean won is the official currency of North Korea, though it remains weak compared to other currencies. The government sets the official exchange rate, which is not market-determined. The North Korean won is also subject to tight restrictions, making it difficult for citizens to save money and purchase goods.
In addition to the North Korean won, the government has issued several other forms of currency, including the United Nations (UN) won and the People’s Bank won. These are not circulated as widely as the North Korean won and are not accepted outside of North Korea.
The government has also introduced its own crypto currency, the Koryeon, in an effort to bypass international sanctions and access world markets. However, it remains to be seen if the Koryeon will be successful in its mission.
The Impact of Sanctions on North Korea’s Economy
International sanctions have had a significant impact on North Korea’s economy. They have limited North Korea’s access to the global financial system, making it difficult for the country to engage in international trade and access world markets. The sanctions have also made it difficult for North Korea to access foreign currency, leading to a shortage of foreign currency in the country.
The sanctions have had a severe impact on North Korea’s economy. Prices of goods are inflated, making it difficult for citizens to purchase items they need. In addition, it is difficult for North Korean citizens to save money, as their wages have remained stagnant over the past several decades. The sanctions have also had an inflationary impact on prices, further diminishing the value of the North Korean won.
The North Korean government has attempted to counter the effects of the sanctions by introducing new economic reforms and by expanding its trade relations with China. The government has also introduced its own crypto currency, the Koryeon, in an effort to bypass international sanctions and access world markets. However, it remains to be seen if the Koryeon will be successful in its mission.
The North Korean Won and Foreign Exchange
The North Korean won is not widely accepted outside of North Korea. In some countries, it can be exchanged for foreign currencies at various money changers, but the rate of exchange is typically very unfavorable. As a result, North Korean citizens have resorted to exchanging their won for Chinese yuan in the black market in order to purchase goods from abroad. This has had an inflationary impact on prices and further devalued the North Korean won.
The North Korean government has attempted to crack down on black market activity. It has also attempted to impose limits on the types of goods that can be imported into the country in an effort to control prices and prevent black market activity. Nevertheless, North Koreans continue to find ways to get their hands on foreign currencies.
The North Korean won is accepted in some international trade transactions. North Korea has a bilateral trade agreement with China, which allows for the exchange of goods and services. In addition, North Korea has opened up its economy to foreign investment, allowing for the purchase of North Korean assets. North Koreans also use Chinese yuan and US dollars to buy and sell goods from abroad.
