N Korea bans foreign currencies

N Korea bans foreign currencies

N Korea bans foreign currencies

Reports say the decree warns of severe punishment for anyone using US 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 on January 1, aims to “forbid the circulation of foreign currency,” China’s state-run CCTV television said in a brief report on Wednesday.

The Daily NK, a Seoul-based online news outlet, said the order prohibits all individuals and organisations apart from banks from possessing foreign currency. It said the decree was posted in public and at workplaces. The order comes weeks after the government redenominated 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 tightened sanctions for its nuclear defiance that have curtailed its arms exports and other traditional sources of hard currency. Unable to feed its 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 redenomination 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 currency revamp could trigger instability in North Korea that may pose a threat to South Korea, its defence chief warned on Thursday in Seoul.

“It’s difficult to predict what type of threat would come to us following a possible regime instability that could occur due to the aftermath of the currency reform” and the power handover believed under way in North Korea, Defence Minister Kim Tae-young said in a New Year’s message to troops.