North Korean authorities recently issued an order to increase the number of stores accepting foreign currency operating nationwide in what appears to be an effort to absorb even more foreign currency circulating in the country.
“In mid-June, party and government agencies in areas outside of Pyongyang were informed by the central government that they were doing a poor job of managing [collecting] local [North Korean] and foreign currency held by locals, and were ordered to implement a more systematic form of management,” a source in North Hamgyong Province told Daily NK on Tuesday.
ABSORB IT ALL
According to the source, the order stipulates that stores already accepting foreign currency, along with department stores, must now exclusively accept foreign currency during transactions.
The authorities also mentioned in the order that all provinces must increase the number of other stores accepting foreign currency to entice more people to buy products using foreign currency. The order included a directive that these stores include separate areas to spend local currency and foreign currency so that buyers – regardless of what currency they are using – can purchase products.
According to the source, the motivation behind the government’s latest order is to absorb as much foreign currency held by people in the country as possible. North Korean officials have tried to collect foreign currency through various ways – sometimes even by force – in the past, but it appears that the government has now acknowledged the limitations of this approach and adopted a more practical plan of action.
“While the authorities have tried to systematically collect foreign currency through the country’s trade operations and foreign currency-earning companies, they haven’t had a systematic plan to collect foreign currency from ordinary people for some time now,” the source said. “The recent order is aimed at implementing a more effective way to absorb foreign currency now that more foreign currency is circulating in the country than local [North Korean] currency.”
While the goal of the new approach is to absorb foreign currency circulating in the country, the gradual marketization of the economy means that much of this currency goes into the pockets of the donju, the country’s entrepreneurial class, the source further reported, adding, “North Korean officials think that it will be difficult to absorb all of this foreign currency because of that, and the fact that there is currently a shortage of products [to sell] in the country.”
COMPLAINTS FROM BELOW
Daily NK understands that the government’s move to collect more foreign currency by increasing the number of points of sale that accept foreign currency has led to a negative reaction from many people in the country.
Some have even deemed the new plan as an “unreasonable attempt to reduce the amount of money ordinary people have on hand.”
Indeed, the source noted that “many North Koreans think that this is no more than an attempt to take their foreign currency” and that the only result from all of this is a “silent standoff” between the “money-hungry government” and “people struggling to survive.”
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