50,000 notes possibly a fixture of the black market

Only half of the 50,000-won ($45) notes issued by the Bank of Korea (BOK) are being returned to the central bank, adding to suspicion that they may be entering the underground economy or used in unfair dealings.

According to the BOK on Friday, a total of 11.2 trillion won worth of 50,000-won bills were issued in the first half of this year, but only 5.68 trillion won were returned.

That made the proportion of redeemed 50,000-won bills 50.7 percent between January and June, the lowest return ratio of all other paper currencies.

Lower-valued notes such as the 1,000-won, 5,000-won and 10,000-won notes have far higher rates.

In the first half of this year, the rate for 10,000-won notes stood at 111.2 percent while the rate for 5,000-won notes was 93.5 percent while the 1,000 won note was 94.7 percent.

When the 50,000-won banknotes, Korea’s highest denomination, were introduced seven years ago, some raised concerns that the note’s high nominal value could make it easier to be used in the so-called underground economy or black market, which refers to the exchange of goods and services in an illicit manner.

The term includes prostitution and slush funds.

Still, the collection rate by the BOK has gradually increased over the years.

The central bank saw a record low rate of 25.8 percent in 2014, then it restored 40.1 percent last year.

After being launched in 2009, the 50,000-won note has become widely used, according to the BOK.

The central bank also said that the 50,000-won note accounts for 76 percent of all money circulated in the country’s markets.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]