North Korean authorities have ordered commercial banks to intensify efforts to collect idle local and foreign currency from the public. The directive, issued by the Central Bank and Cabinet’s State Planning Commission, aims to address the nation’s economic troubles and foreign currency shortage.
According to a source in the country recently, the order focused on regional commercial banks strengthening their foreign currency management and securing liquidity.
To do this, commercial banks have visited enterprises to coax them to conclude foreign currency settlements or make payments through the banks, or to get their employees to sign up for savings products.
The order stands out because it puts the central government in direct control of collecting foreign currency from banks in Kaesong city. Officials in Pyongyang seem to think Kaesong’s businesses and residents are holding onto significant amounts of foreign cash.
Incomes in Kaesong are relatively high since many enterprises and residents raise specialty crops like ginseng to make liquor or other foodstuffs for sale. Moreover, because enterprises in Kaesong engage in trade autonomously, authorities believe they earn a lot of foreign currency.
Accordingly, Kaesong’s commercial banks are supplementing their systems to allow enterprises to deposit and withdraw funds whenever they wish and to encourage them to make payments through the banks.
“The city’s commercial banks have created separate teams to strengthen their banking systems to draw deposits from enterprises more actively, and since Oct. 30, they have visited factories and enterprises to explain the economic effects when businesses deposit funds in the banks and the convenience of the bank payment system,” the source said.
Additionally, the city’s commercial banks have visited neighborhood watch units to explain their savings products to ordinary people and encourage them to place their idle cash in bank accounts.
North Korea’s regional commercial banks have visited enterprises to encourage employees to sign up for savings products before, but people are surprised that the banks are visiting neighborhood watch units to coax ordinary people into depositing their money.
“This is the first time I’ve seen representatives from commercial banks visit ordinary people to get them to deposit money,” the source said. “The state appears to be making (renewed) efforts to suck up the people’s cash.”
Kaesong residents have pushed back against bank representatives, telling them they lack funds to deposit. Many explained they lost their ability to save money after the closure of the Kaesong Industrial Complex, noting they now have no way to earn foreign currency.
Bank employees in Kaesong are expressing frustration with the central government’s new oversight of foreign currency collection. Many say they cannot produce results when the city clearly lacks funds.
According to the source, even if banks pressure businesses and residents to deposit savings, they won’t succeed – suggesting the government is unfairly squeezing local banks for foreign currency that simply isn’t there.
Daily NK works with a network of sources in North Korea, China, and elsewhere. For security reasons, their identities remain anonymous.
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