Chosun Central Bank branches in every region of North Korea began exchanging all 5000 KPW bills on August 1, 2014. The North Korean authorities have yet to make any official statements on the matter, but as Daily NK first reported, Kim Il Sung’s image did not appear on the new bill. The front of the new 5000 won bill does not feature the image of Kim Il Sung of the previous version; instead, there is an image of the house at Mankyungdae in Pyongyang that the North propagandizes as the leader’s birthplace. The back of the bill contains an image of the International Friendship Exhibition at Mt. Myohang.
The incident has incited a number of theories as to the reasons behind the adjustment, but two or three are featured most prominently in discourse on the topic: Eliminating the “bill idolization” of Kim Il Sung will facilitate Kim Jong Eun in moving out of the shadows cast by his grandfather and assert himself as a political leader in his own right and, [
 The North Korean authorities are trying to collect stockpiles of cash that residents have tucked away; this argument also incorporates speculation of a “counterfeit prevention measure” at play.
The tendency to categorize this recent exchange as currency manipulation lingers from the 5th currency reform policy enforced in December 2009, where residents saw old currency converted to a new one at an appalling 100:1 exchange rate. Limits were set at 100,000 KPW [later on this expanded to 500,000 KPW] for total exchanges per household. Money that residents toiled to earn was reduced to bits of worthless paper, enabling the government to use its newly printed reserves indiscriminately. The results were catastrophic.
The conditions in the most recent exchange are fundamentally different; this time presents as nothing more than a simple exchange of bills. No caps exist on the amount an individual can exchange and exchanges will be accepted until 2017. In both the 1992 and 2009 currency reform policies, residents were informed after depositing the old bills the new bills would be available as cash after a designated period of time. Attempts to later withdraw these new funds greeted residents with a message stating, “There are no cash reserves in the bank.” These cases were intermittent during the 1992 reforms but without exception during the round in 2009.
To assert that the recent 5000 KPW exchange is an effort by authorities to flush out reserves earned on the black market is unfounded; still, this was the predominant theory brought forth by South Korean intelligence.
On July 31st, National Assembly Intelligence Committee head Lee Byeong Ki classified the recent move by North Korea as a way to obtain funds the Nouveau riche class, or donju, had stashed away. Whether this was verbatim or fellow intelligence assistant administrator failed to effectively convey the intended message to the press cannot be verified. However, National Assemblyman Lee Cheol Woo [assistant administrator of the ruling party] told reporters at the briefing, “The new bill is to flush out the hidden reserves of affluent Party cadres and officials.” National Assemblyman Shin Kyeong Min [assistant administrator of the opposition party] reported much the same on the situation, “ There is a bit of a scramble for them to stockpile goods with the money while they can.”
The 5000 KPW bill is currently the largest denomination monetary unit in North Korea, akin to the 50,000 KRW employed in the South. As of August 2014, the market price of a kilogram of rice hovered around 6000 KPW, for which you could not pay with the highest banknote in the North. Household appliances and similarly expensive goods are overpriced because they are sold in Chinese Yuan, a practice born simply of convenience.
Beset by chronic shortages of electricity, most households use 12V batteries manufactured in China; this is an absolute essential for residents in the North. When asked the price of a 12V battery, vendors reply, “200 KPW,” not the actual price of 240,000 KPW. This is because rather than doing business with 48 5000 KPW bills, it is far more convenient to use two 100 RMB notes.
Storing up 5000 KPW notes is unlikely to be of any assistance either; it’s impossible to know when another wave of currency reform could occur. “Our money can become worthless pieces of paper at any time,” many residents say, citing the 2009 reforms. Be it for convenience of transaction or accumulation of savings, the 5000 KPW note has lost its legitimacy as the nation’s highest denomination note. This renders the speculation that the recent exchange was an effort in “fraud prevention” illogical.
In the case that this recent measure was not a straightforward exchange of bills, we are left with the supposition that Kim Jong Eun is asserting himself as a political leader. This recent measure sought only to collect the bills featuring Kim Il Sung’s likeness. In other words, a new bill will be distributed without featuring the leader’s resemblance. Thus, what significance would this hold for Kim Jong Eun?
North Korean official currency notes first surfaced in 1947 in four denominations : 100 KPW, 10 KPW, 5 KPW, and 1 KPW. Currency reform at that time aimed to gather bills in circulation from both the Japanese Government General of Korea’s rule and the Soviet military administration. Old bills were converted to new at an exchange rate of 1:1. In May of 1949, coins were issued, the largest denomination a 50 jeon piece followed by 20 jeon and 15 jeon increments.
100 KPW bill issued in 1979.
First note to carry Kim Il Sung’s portrait.
Image: Daily NK
The second round of currency reform was passed in 1959. This time the aim was to mitigate inflation stemming from the Korean War and secure sources of investment. This time the old notes were exchanged for the new ones at a rate of 100:1. New bills were also introduced in increments of 100 KPW, 50 KPW, 10 KPW, 5 KPW, and 1 KPW. New coins were issued as well: 50 jeon, 10 jeon, 5 jeon, and 1 jeon. No limits were placed on exchange sums.
100 KPW issued during 4th currency reform
in 1992. Image: Daily NK
In 1979 North Korea was operating under Kim Il Sung’s “Monolithic Ideology System”, carried on after Kim Jong succeeded his father. Under Kim Jong Il’s leadership, idolization of Kim Il Sung became ingrained in state ideology. Unlike Chinese Yuan, where Mao Zedong appears on all the major bills, North Korea placed Kim Il Sung solely on the 100 KRW bill, the highest denomination bill in circulation at the time.
Kim Il Sung’s likeness on the largest denomination became official practice after the 4th round of currency reform in 1992. This time however, the stern image of the leader in military garb reminiscent of Mao was replaced by a portrait of the leader sporting a suit and tie.
Other incidents in the North have seen new notes introduced without correlating currency reform or manipulation. In 1998, the first 500 KPW bill appeared, but with an anomaly still not presently understood. The front of the bill featured the Kumsusan Palace of the Sun, which serves as the Kim family mauseoleum. The Party had originally drafted a plan to juxtapose a slightly larger image of Kim Il Sung with the Palace, yet the final bill showed the building unaccompanied by the leader. Until the issuance of the 1000 KPW note four years later, Kim Il Sung’s likeness would not appear on the largest denomination note in North Korean currency. There is some speculation that the anomaly can be explained in conjunction with with the “Arduous March” [the North Korean famine of 1994-1998], but the theories lack detailed explanation.
1000 KPW note issued in 2002.
Image: Daily NK
The 7.1 Economic Management Measures in 2002 established a 1000 KPW bill to correlate with state orchestrated price adjustments. Kim Il Sung’s portrait, the exact same design as that on the 100 KPW bill, appeared on the front of this newly issued note, demonstrating a return to the practice of placing the leader’s image on the highest denomination currency. The measures also introduced a 200 KPW note featuring a peony on its front. In 2005, the same image of Kim Il Sung originally employed on the 100 KPW note was applied to the 5000 KPW bill.
5000 KPW note in circulation since 2005.
Image: Daily NK
With the exception of the 500 KPW note introduced in 1997, after 1979 Kim Il Sun
g consistently appeared on the highest denomination in circulation at a given time. The introduction of each new bill resulted in the dismissal of the leader’s resemblance from previous bills. The 2009 currency reforms saw the removal of the Kim Il Sung’s likeness from the 1000 KPW note [the same image previously used on the 100 KPW bill] as a new 5000 KPW bill had been issued. The fresh bill utilized a benevolent, smiling taeyang-sang, substituting the grave, youthful likeness of leader occupying the largest bills for 17 years.
100 KPW note issued in 2009.
Kim Il Sung’s image was removed
after it was featured on the 5000 KPW note.
Image: Daily NK
What were Kim Jong Eun’s motivations? Would he really erase his grandfather from a fundamental part of society? Through the lens of idolization for Kim Il Sung, the reasons underpinning the removal of his likeness from the 5000 KPW are evident. After the collection of all the old 5000 KPW notes, Kim Il Sung’s resemblance will cease to exist on any unit of North Korean currency.
It’s difficult to agree with the assumption that Kim Jong Eun wishes to get out from under his grandfather’s shadow and assert himself as a leader, and even less logical to assume that this method would be an effective method to go about doing so.
1000 KPW note issued in 2009.
Image of Kim Il Sung was removed
after it was used on the 5000 KPW note.
Image: Daily NK
With nothing else but his ties to the Mt. Baekdu bloodline to bolster his legitimacy, for Kim Jong Eun to cease with idolization of his grandfather would be suicidal. During the last three years, Kim Jong Eun has instigated every statuary work of both his father and grandfather standing side by side. Chosun Central New Agency heavily covered the lavish unveiling ceremonies for the recently erected set of Kim statues in Sinuiju. These points make conjectures of a sudden decision by the leader to remove Kim Il Sung’s image from the currency unfounded.
The most logical answer to why the image has been removed is for a new 10,000 KPW bill to be put into circulation, and when it comes out, Kim Il Sung’s likeness will appear once again. Sources within the country tend to agree, “North Korea would never have a set of currency absent of the Suryong.” If the authorities are indeed preparing to release a new bill, the theory of idolizing Kim Il Sung on the highest denomination bills maintains its validity. Residents say,“They erased him [on the 5000 KRW note] but they’ve already set up a place for his new image to go [on the 10,000 KRW bill.”
5000 KPW note in 2009 that replaced previous.
Image of Kim Il Sung was changed to
the smiling taeyang-sang. Image: Daily NK
Economically, it makes the most sense that Kim Jong Eun would want to introduce a higher denomination bill into North Korea’s currency. The market prices that remained stable during the young leader’s first two years in power are on the rise again and all of his idolization projects demand larger government expenditures. There is no simpler method to produce tangible results of these endeavors than introduction of a new bill. Most democratic nations, with a system of checks and balances on the central bank, would consider the decision to introduce more money into circulation a political decision. In this case, Kim Jong Eun is no exception.
Compared to past scenarios, the current probability of a new 10,000 KPW is stronger. The 1000 KPW and 5000 KPW notes were both introduced without any currency reform or manipulation. The higher the denomination on the bill, the increased potential for future troubles faced by the government. This “disappearance of Kim Il Sung” demands more attention and consideration from those surmising about its background; after all, the migration of Kim Il Sung’s image from one site to another always comes with various political and economic factors.