Changchun, China — The North Korean People’s Safety Agency has declared a “complete prohibition of foreign currency usage.” The decree was issued on December 26th and went into effect on Monday 28th.
A source inside North Hamkyung Province reported, “A People’s Safety Agency declaration on banning the use of U.S. dollars, Yuan and the Euro was publicized on the 26th. The declaration was posted in public places and in every workplace starting this morning.”
The title of the declaration is, “On punishing severely those who use foreign currencies within our Republic.” Surprisingly, the targets of the declaration are said to include foreigners visiting North Korea.
A source from Yangkang Province also reported, “From December 28, no foreign currencies can be used. The foreign currencies the declaration meant were dollars, Yuan and the euro.”
According to the source, this new regulation was a Cabinet decision, and the People’s Safety Agency is responsible for its implementation.
The declaration stipulates, “Not for any reason may individuals or organizations possess any foreign currency, with the exception of banks.”
However, just how the authorities intend to extract foreign currency from individuals and enterprises remains to be seen.
The Daily NK’s North Hamkyung Province source said, “The possibility of compensating for confiscated currency is low, because it has in itself become illegal for an individual to own foreign currency.”
According to the declaration, trading enterprises or foreign currency earning organizations should put earned foreign currency in the bank within 24 hours and, if they fail to do so, managers will be punished.
The declaration also states, “All the foreign currencies held by trading enterprises should be put in the bank and, when it is needed for trade, it can be withdrawn after obtaining approval.”
Foreigners, meanwhile, have to pay their currency into a designated account and exchange it for North Korean won. If they violate the regulation, they will be punished somehow, though no details are currently available.
The North Hamkyung Province source also cautioned, “Upon the release of this declaration, there will inevitably be someone sent to a prison camp or sentenced to an extreme penalty as a model case. These days, if you are unlucky, you may become the model case for bringing in Yuan or dollars.”
The reason for this measure is that there is no confidence in the North Korean currency, so the public preference is for foreign currency holdings, which the authorities cannot regulate easily.
Nevertheless, it is unlikely that people will willingly pay their own foreign currency to the state, irrespective of this requirement, while it is likely to end up stoking inflation.
The source explained, “For the time being it will be difficult to use foreign currency, but after a while, it may be possible to use it again. Since faith in our money has already dropped, no matter how hard the authorities regulate it, demand for foreign currency will increase.”