The Kim Jong-un regime recently handed down a “proclamation” under the name of the national police agency and moved to intensify crackdowns on private economic activity. The proclamation states that the distribution of goods and the use of foreign currency are only permitted under government auspices. The proclamation has led to unrest among North Koreans. ASIAPRESS will report on this issue through the series. The first installment below focuses on the ban on the use of foreign currency. (KANG Ji-won / ISHIMARU Jiro)
◆ The police distribute a “proclamation”
The “proclamation” was suddenly handed down in early August. Two reporting partners in the northern region of the country reported that the proclamation had been put up at district offices and that lectures were held to explain the content of the document.
A reporting partner living in North Hamgyung Province told ASIAPRESS that the title of the proclamation was “In Regards to the Thorough Ban on Goods Transactions Outside of Government Control and the Circulation of Foreign Currency.” The proclamation was handed down by the Ministry of Social Security, the country’s national police agency.
“An official came to conduct a lecture at a neighborhood watch unit meeting. The official told us that up until now, the authorities have strictly controlled the use of foreign currency, but failed to eliminate its use, so we must report anyone using foreign currency.”
Most of the foreign currency circulating in North Korea is Chinese yuan and American dollars. China accounts for over 90% of North Korean trade. A diverse range of goods are supplied into North Korean markets, and starting in the 2000s, the Chinese yuan was used widely in the country.
Due to the national currency reform of November 2009, North Koreans experienced suddenly being unable to use their own currency. As a result, the value of the North Korean won plummeted, and people avoided using it. Instead, North Koreans tried to acquire as much foreign currency as possible. From 2010, Chinese yuan began to be used in private transactions at markets, so much so that people used the currency to purchase blocks of tofu through street vendors.
At the time, the Kim Jong-il regime handed down a proclamation about the widespread use of foreign currency. The proclamation included mention of execution for those caught using foreign currency, but that did not stop people from turning to foreign cash to conduct transactions.
◆ Crackdowns begin in 2019
North Korean authorities began heavily cracking down on the use of foreign currency from November 2019, when remarks made by Kim Jong-un – where he complained of people’s avoidance of North Korea’s own currency and their desire for foreign currency – was promoted throughout the country.
This immediately led to the banning of foreign currency in markets, but people still continued to demand foreign currency in transactions to protect their assets, even if they couldn’t use foreign currency in the open.
◆ The authorities unconditionally confiscate foreign currency, even from people’s wallets
A reporting partner in Yanggang Province provided the following report about what kinds of crackdowns are occurring following the handing down of the “proclamation.”
“The authorities have started conducting random inspections at markets. If someone is even suspected of having used Chinese yuan, their personal items and even their wallets are inspected. If foreign currency is found in the inspection, it is confiscated without question.
“Up until now, people could ask officials to calculate the worth of the confiscated foreign currency and get the North Korean won equivalent back, but that’s not how things are done anymore. The authorities just confiscate the foreign currency without question. Money exchangers have become targets of crackdowns and even face house searches. On August 13, people who had their Chinese yuan confiscated by authorities at a market made a fuss. There are people who have avoided getting their Chinese cash taken away by going to banks and exchanging it for North Korean won.”
Regional banks have long exchanged foreign currency for local currency. However, the reporting partner said that there are few people who exchange their foreign currency at banks because the exchange rates are much worse than black market exchange rates, and because people don’t want to let the authorities know they have foreign currency by giving the banks personal information, such as their names.
The reporting partner added: “The authorities are ordering people to exchange their foreign currency at banks for North Korean won. People can’t buy or sell things with foreign currency, except at state-run grain shops. Many people are unhappy about the crackdowns on foreign currency. There are people who know they’ll never give up their foreign currency because of uncertainty about when North Korea’s currency will become as worthless as toilet paper. Meanwhile, many others are thinking hard about what to do given the worsening crackdowns.”
※ ASIAPRESS communicates with its reporting partners through Chinese cell phones smuggled into North Korea.
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