[EDITORIALS]Forget about redenominationRegarding the redenomination of the Korean won, Lee Hun-jai, the deputy prime minister of finance and economy, told the National Assembly yesterday: “The stage of study and examination is over. Now we are in the early stages of examining the details of the plan.”
He also said, “Issuing a large-denomination bank note, if it is done now, will be subject to re-examination in four to five years in view of the size of our economy. Therefore, wouldn’t it be better to refrain from doing so?”
For the first time, the government recognized the necessity of changing the denomination of the Korean currency and clarified that it has started to examine the details of the plan.
We are of the opinion that it is not appropriate to examine the redenomination of our currency now. Those who advocate redenomination claim that Korea may, due to the growth of its economy, have to use a higher value than a trillion in the near future. And they point out that the face value of the Korean currency is the lowest among the currencies of the OECD countries.
But redenomination is not a simple matter that can be promoted for the sake of convenience of calculation or face- saving. The burden that accompanies the change, including unstable consumer prices and the necessity of changing all automated equipment and accounting programs, is not small. The psychological and emotional uneasiness caused by confusion over a unit change can’t be ignored. There is a possibility that the debate over redenomination could turn into another factor for social unrest. Japan, which has a similar situation, has discussed the matter several times, but a decision is still pending for these same reasons.
The Ministry of Finance and Economy had maintained that it was not the right time to discuss a currency unit change. Although there has been no abrupt change in the economic situation, the ministry suddenly says it has changed its position and has started to examine details of the plan. We are curious to know the reason behind such a decision.
We think the debate on redenomination is unproductive. As we have said, redenomination can be considered only when the currency unit we are using causes serious problems in people’s lives. It would be much more economical if we saved the hundreds of billions of won wasted on the issuance of bank checks every year by issuing a large-denomination bank note.