A Rising Trend in the North Korean "Financial Industry"

North Korean won.

Today, the North Korean people prefer Chinese renminbi and US dollar over North Korean won. But there is another rising trend in the North Korean financial industry.

Currency grows shabby with repeated use, but foreign bills in North Korea must go on being used for they cannot be replaced. If a bill becomes too worn it will ultimately lose its value, but people’s lives depend on it. So a cottage industry has grown up around the art of returning damaged currency to a usable state.

Choi Mi-jin defected from Chongjin via Onsung last November. He says, “In North Korea, when we take or receive money, we always check the large denomination notes. Hold them up to the light or touch them to see the texture to see if it’s counterfeit. This easily damages the bills over time. Parts get so worn that the image can’t even be seen. But there are these people who will fix it for you.”

According to refugee testimonies, you can take bills with worn areas to those who will use a small needle-like tool to add ink, returning the image to its former state.

Choi adds, “It’s amazing technique. This is done mostly with US dollars, because their value is higher.”

The North Korean people have increasingly preferred Chinese and US currency after they lost faith in the DPRK state currency. This trend was triggered largely by the 2009 currency redenomination, in which people saw their life savings in North Korean won turn into useless bits of paper.

Go Jin Cheol, a defector who lived through the 2009 currency redenomination, explained, “The state would only exchange a fixed amount, and the rest had to be given up, so I threw the remainder in the river in a fit of pique. There were plenty of people who burnt it until there was nothing left.”

When US dollars are changed into North Korean won, there is so much of the latter that it can be hard to store. Many people choose to keep their money in US dollars. But Choi explained that there were problems with this method of storage too.

“I recall that, bizarrely, rust does not form on bi (Chinese money) but it does on US dollars. People used to say it’s because there is iron in the American money. But if we take the rusty money to that guy, he uses ‘laundry soap’ to gently wash it off and make it clean.”

This new-style of “financial industry” has emerged because the North Korean people have been losing trust in the regime’s economic framework. If they put money in a North Korean bank (which defectors say are banks in name only) the interest will be derisory, and they may not even see the principal again.

Moreover, if they were to save a large quantity of foreign exchange in a bank, suspicions over the source of that money would make them an instant surveillance target for the Department of State Security.

As a result, neither Workers’ Party officials nor North Korean financial-elite will put large sums of money in banks.

With everyone storing money at home, rust is not the only issue: it is inevitable that some will get damp with the humidity in the air and end up getting damaged.

Due to these reasons, North Koreans look after their limited amounts of foreign currency with great care. If it gets damaged they must pay to have it seen to, so they try from the beginning to avoid letting it be harmed, and won’t fold it lest the face in the middle grow worn.

As a formality they may hang images of Kim Il Sung on their walls, but it is damage to the face of the president on their US dollar bills that North Koreans take greatest care to avoid.