North Korean authorities are apparently trying to placate people outraged at a shock currency reform announced on Dec. 1, raising the maximum amount of old bills that can be exchanged into new ones, sources in North Korea said on Monday. The decision follows reports of market riots in response to skyrocketing commodity prices that caught authorities on the back foot.
Sources said the North on Dec. 6 raised the maximum amount of old bills that can be exchanged from 100,000 won per person to 500,000, still at a rate of 100:1
Authorities reportedly said this was only a first step, and eventually people would be allowed to exchange all their old bills into new ones if they deposit their money in the bank.
That in turn raised fears among people that their savings could effectively disappear if, as has happened in the past, they then not allowed to withdraw any money. Authorities then promised not to trace the sources of deposits up to 1 million won, and allow people to deposit more than 1 million and withdraw all of it if they can explain how they earned it.
The announcements came after rioting by market traders in the Hamhung region was reported on Dec. 5-6 amid sympathy from ordinary people, sources said. The riot by was apparently of such proportion that 12 "masterminds" were summarily executed, with authorities on heightened alert for mass defections, suspending issuance of border passes and reinforcing border guards.
A high-level North Korean source said it seems authorities "are backtracking under pressure from market forces. We're now living in an era where it's not as easy as it used to be to deal so recklessly with people's property. That's why I think authorities will eventually end up allowing people to exchange all the money they have in old bills into new ones."
Another inside source said during the last currency reform in 1992, all state agencies made thorough preparations, but this time they seem to have acted in haste and without a plan for what happens after.
The current uproar was apparently the result of a lack of regulations on commodity prices or monetary transactions between enterprises following the currency reform, which sent prices skyrocketing. State-set prices seem to fluctuate depending on market changes.
A South Korean government official said, "It seems true that there was confusion due to a widening gap between state-set prices and real ones in the market." He suggested that was not at all what the regime had in mind given how short supplies were already.