North Korea issues new bank notes to flush out cash

AFP
Service personnel of the North Korean Army at the plaza of the Kumsusan Palace of the Sun in Pyongyang, on the 61st anniversary of the victory of the Fatherland Liberation War, July 27, 2014
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Service personnel of the North Korean Army at the plaza of the Kumsusan Palace of the Sun in Pyongyang, on the 61st anniversary of the victory of the Fatherland Liberation War, July 27, 2014 (AFP Photo/)

North Korea has started issuing new bank notes in an apparent effort to flush out privately hoarded cash reserves, according to South Korea's National Intelligence Service (NIS).

In a briefing to a parliamentary committee, the NIS said the new notes were issued from July 30, Yonhap news agency reported Friday.

Old bank notes can be exchanged or used for an unspecified grace period after which they will cease to become legal tender, the NIS said.

"This is apparently aimed at compelling people to cough up their cash hoards," Lee Cheol-Woo, a lawmaker with the ruling Saenuri Party, told Yonhap after Thursday's briefing.

North Korea has a thriving black market which has, to some extent, supplanted the state goods distribution system.

The widespread use of other currencies, especially the Chinese yuan, has also given rise to an unofficial currency exchange system.

The issuance of the new notes did not appear to be accompanied by any actual currency reform like the disastrous revaluation attempted in 2009.

Implemented during a backlash against emerging private markets, the devaluation wiped out personal savings and triggered rare public protests.

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