[EDITORIALS]Currency reform - nowAt the National Assembly inspection of the Bank of Korea, the central bank said that a large-denomination bank note should be issued quickly. It said the step was necessary to match Korea’s economic scale, and that bigger bills would have large positive direct and indirect effects.
But the government still has a cautious attitude. Early this year, the government said the design of banknotes would be changed to prevent counterfeiting, but that the same denominations would continue to be issued. Nevertheless, the bank emphasized the need to introduce a higher-denomination bank note, saying the step could not be delayed. Some observers contended that it would be a waste to change the designs first and then issue a high-denomination banknote later.
The 10,000 won ($9.6) note, the largest now in circulation, was introduced in 1973, 32 years ago. The scale of our economy has increased greatly and retail prices have increased so much that transactions are difficult with only 10,000 won notes. As a result, bank checks with a face-value of 100,000 won are used in place of banknotes. Koreans pay more than 400 billion won annually for those large-denomination checks. The inconvenience and waste of time in obtaining and cashing those bank checks are difficult to translate into money.
The average value of the highest-denomination note in use in member countries of the Organization for Economic Cooperation and Development is the equivalent of 370,000 won. Among the 212 nations globally, only 29 countries in Asia and Africa, mostly poor nations, have no banknotes of a higher denomination than our 10,000-won notes. The volume of transactions in a national economy drives the need for higher-value currency.
The government claims that large notes would induce corruption. But developed countries that use higher-denomination notes than ours are not more corrupt than Korea. The idea that we can end corruption with currency is a backward way of thinking.
We have urged the introduction of higher-value currency several times. According to a Korean Chamber of Commerce and Industry survey, over 81 percent of the people support the introduction of 100,000 won notes. There is no reason to postpone the step. The government must issue 100,000 won banknotes to replace 100,000 won bank checks.