[EDITORIALS]Go slow on currency reformPark Seung, the governor of the Bank of Korea, said Sunday that he will recommend before the end of the year whether and how to change the currency system. There are currently three propositions on the agenda: to issue larger notes, to redenominate the won upward in value and to issue new notes that bear stronger anti-forgery features.
Currency issues directly influence public sentiment. We must ask, at this time, whether currency reform is urgent and what the influence on the economy would be.
Even if the three issues were already examined and ready to be pursued as government policies, we still are weary of redenomination, which would take zeros out of the values printed on bills but would not affect the actual value of the bill.
We will repeat the point that we made several years ago in an editorial. We need a 100,000 won note ($84). Since 1973, when a 10,000 won note was first issued as the largest note, consumer prices have gone up by 11 times and the scale of our economy has ballooned more than a hundredfold.
Every year, a billion 100,000 won bank checks, which are now substituted for large bills, are circulated. It costs our economy more than 600 billion won a year to issue, handle and store them. Most of the extra expenses of banks are passed to customers. If larger face value notes were printed, it would contribute to cutting transaction costs of banks.
The main reason against the issuance of higher-value notes is concern over slush funds. But the issue of corruption is a problem to be dealt with separately from issuing large face value notes. You cannot say that countries that have large notes, such as the United States or Japan, are more corrupt than Korea. Currency less prone to counterfeiting is also necessary, considering the emergence of good quality photo copiers.
The central bank says that only countries with economies less developed than Korea have exchange rates against the U.S. dollar that exceed 1,000:1. But the costs and potential dangers are too high. We cannot ignore the social and psychological costs. Changing the currency unit would seriously influence the life of the general public. We need time to contemplate.