North Korea’s elusive cash coupons from A to Z

A photo of the currency bills currently in circulation in North Korea. / Image: Daily NK

More than two months have passed since the North Korean authorities issued cash vouchers, or donpyo, to absorb foreign currency. However, most North Koreans are unaware that the coupons were issued.

According to several Daily NK sources, only certain executives, money changers with a lot of currencies and donju (rich people with a lot of money or goods) know donpyo. Even a lot donju I’ve never seen one in real life.

The authorities have not yet issued any official statements, measures or briefing documents confirming the existence of the donpyo, so the rumors surrounding the coupons are rife even in North Korea.

For this reason, Daily NK conducted an in-depth interview with a source in North Korea familiar with the publication of the donpyo to verify why the authorities issued the coupons and what relevant actions they took.

What follows is a question-and-answer session with Mr. A, an executive engaged in finance related duties.

DK: Have the authorities issued any official statements or documents relating to the donpyo since their release?

Mr. A: No. So far, they’ve just forced people who use real foreign currencies to change their money and told them that “the donpyo it is as good as money. They are only trying to convince people who are about to buy something with foreign currency that the donpyo are worth the same as money. When they issued donpyo in the past, they would put up signs in banks, state-designated money changers, money changers and elsewhere, telling people how to use them. In fact, the authorities usually provide information on the implementation of new policies, but so far there have been no documents relating to the donpyo published.

DK: if the State issued the donpyo just to absorb foreign currency, was it really necessary to issue a new currency?

Mr. A: People with foreign currency are either executives or donju. The authorities have already tried on several occasions to invest these people. But who is going to voluntarily give their money to the state today? They will not give up their foreign currency, even if the state offers them incentives. However, the authorities ruled that if they substituted donpyo for currencies when people are about to use them, the donpyo circulate in stores and markets while foreign currency goes to the state. It is a kind of “campaign” to take “idle money” held by the private sector and use it to finance the state economy.

DNK: Doesn’t a “campaign” suggest a temporary measure? Does this mean that nothing has been legally stipulated regarding the donpyo in North Korea?

Mr. A: This is the case so far. The State Planning Commission and the Central Bank basically implemented a temporary measure to suck foreign currency into state coffers. The Standing Committee (of the Supreme People’s Congress) has not passed any law on this matter. The vouchers are simply intended to temporarily withdraw the money the government needs to achieve optimal results during the remaining four years of the five-year economic development plan; the authorities will not continue to use the donpyo in the future. You can think of it as a temporary and special measure.

North Korea Central Bank building / Image: Sogwang

DNK: Some say that North Korea issued the donpyo because the country lacked paper and ink to print money.

Mr. A: This is not why. It is a country that fires nuclear missiles, no matter how little money it has. Do you think it can’t print money just because it doesn’t have toner? You can save some money when you print money if donpyo flow well, and you can print fewer KPW 5,000 invoices by substituting donpyo worth 5,000 KPW for them. But that is not the main reason they were issued. The main reason was not to save money on printing banknotes, but to suck foreign currency into the pockets of the state and increase the value of the local currency by reducing its circulation.

DK: to withdraw inactive money from donju, it looks like you would have to issue donpyo in higher denominations, then why issue most of them in 5,000 KPW denominations?

Mr. A: First, KPW 5,000 is the highest denomination of the local currency. They thought if you printed higher denominations it might cause confusion. More importantly, the authorities did not want to give the impression that they printed the donpyo so that the state can suck foreign currency. They think it’s important to make people believe that coupons are just something you use when spending foreign currency. That is why they use them first in stores and print them in familiar names.

DNK: The exchange rate recently held steady at 5,000 KPW to the dollar, donpyo issued in denominations of 5,000 KPW to enable them to easily exchange foreign currencies?

Mr. A: In the end, that’s partly correct, but not completely. Frankly, they didn’t start printing KPW 5,000 from the start. donpyo synchronized at KPW 5,000 per dollar. The state cannot arbitrarily control the exchange rate. The exchange rate might not stay at 5,000 KPW to the dollar, and the state cannot keep it there.

DNK: Can we say that so far the use of donpyo had no effect on the exchange rate?

Mr. A: That’s right. Circulation of donpyo is very low, not enough to have an impact on the exchange rate. Management plans to print more coupons after seeing the public response and quarterly numbers. At present, they are monitoring trends surrounding the donpyo. They plan to develop a plan of operations based on the quarterly numbers by the end of the year, so I think there will be a decision early next year to use the coupons for cash. good, or to make them disappear discreetly.

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