North Korea bans use of foreign currency | NevadaAppeal.com

North Korea bans use of foreign currency

SEOUL, South Korea (AP) – North Korea has banned the use of foreign currency, another sign its hard-line communist government is intent on reasserting control over the country’s nascent market economy.

Reports say the decree warns of severe punishment for anyone using U.S. dollars, euros, yuan and other non-North Korean currencies. Foreign currencies previously were accepted in some shops, restaurants and other outlets, particularly those catering to foreigners.

The order, issued by North Korea’s state security bureau and going into effect Jan. 1, aims to “forbid the circulation of foreign currency,” China’s state-run CCTV television said in a brief report late Wednesday.

The Daily NK, a Seoul-based online news outlet, said the order prohibits all individuals and organizations apart from banks from possessing foreign currency. It said the decree was posted in public and at workplaces, and went into effect Dec. 28.

There was no mention of the new ban Thursday in official North Korean state media. In Seoul, a South Korean official confirmed the ban, speaking on condition of anonymity because he was not authorized to speak to the media on intelligence matters.

The order comes weeks after the government revalued North Korea’s currency, the won, as part of a far-reaching currency overhaul aimed at curbing runaway inflation and reasserting control over the economy.

The restrictions come as impoverished North Korea faces increasing economic sanctions over its nuclear activities, curtailing arms exports and other traditional sources of hard currency.

Unable to feed its 24 million people, the government began allowing some markets in 2002, including some permitting farmers to trade in produce.

While an economic success, the markets also sold banned goods such as movies and soap operas from rival South Korea. The country’s largest wholesale market in Pyongyang was reportedly shut down in mid-June.

The currency overhaul sought to rein in those who had profited from market commerce by ordering North Koreans to exchange a limited amount of the old bills for new ones, and to deposit their savings in banks.

The revaluation reportedly sparked anger among North Koreans who fear they may never be able to withdraw the deposits. Authorities ordered border guards to open fire on anyone who crosses the North Korean border without permission, an apparent attempt to thwart defections by people disgruntled over the currency reform.

The new decree gives businesses 24 hours to deposit all foreign currency in banks. “When it is needed for trade, it can be withdrawn after obtaining approval,” it said, according to the Daily NK.

The ban is aimed at seizing hold of foreign currency tucked away by those still engaging in private market commerce, said Yang Moo-jin, a professor at Seoul’s University of North Korean Studies.

“The ban is meant to root out people still trading at markets,” he said. “More broadly, it’s aimed at smoothly completing the currency reform by restricting the use not only of local currency but also foreign currency.”

The latest ban also applies to foreigners, who must exchange foreign bills into North Korean won in order to purchase items, reports said.