Currency reform.
In modern history, the number of countries that have successfully carried out a proper currency reform can be counted on one hand.
There were many reasons for failure.
Countries that implented currency reform when the value of their currency had already plumted due to inflation were fortunate enough to stabilize without major turmoil. But countries that carried out currency reform for political reasons fell into extre ❀ Nоvеlігht ❀ (Don’t copy, read here) chaos.
South Korea itself was no exception.
The military regi that ca to power in 1961 also carried out a sudden currency reform in 1962.
But that reform was executed without any planning and in a thoroughly unprofessional manner.
After seizing power and discovering an empty national treasury, the military leaders decided to implent currency reform in order to recover money circulating in the underground economy and use it for economic developnt.
They exchanged a fixed amount of cash into new bills, but anything above that amount was frozen as deposits.
That policy caused severe chaos, and in the end, under pressure from the United States and fierce opposition from the business community, the regi retreated a month later through special asures.
After that, South Korea developed a trauma regarding currency reform, to the point where no one dared to even bring up that card again.
Fortunately, South Korea managed to stabilize relatively quickly, but countries in Africa and South Arica fared far worse.
They did not reverse the currency reforms that had been carried out for the benefit of those in power, and in the end, even after implenting reform, the value of their national currencies fell even further.
Of course, I too believed that North Korea needed a currency reform.
However, the thod I had in mind was completely different from the direction Jang Songthaek was considering.
“Let say it again. Extre currency reform was sothing that could only be done under Kim Ilsung and Kim Jongil. Now, the planned economy has completely collapsed, rations have been cut off, and North Korean residents are surviving by relying on black markets. If you confiscate their assets under the pretext of currency reform, a civil uprising could occur. You wouldn’t be able to suppress it with force either. You have to show that you are different from Kim Jongil. If that happens, even if you open the economy, foreign capital will not enter North Korea.”
“Then what are we supposed to do? There’s a lot of currency circulating on the streets, but almost none of it flows into the banks. In the end, isn’t it true that the economy only cos alive when money circulates?”
Jang Songthaek vented in frustration.
“You need to properly understand why that happened in the first place. Is it the fault of the residents who stash their money in wardrobes? No. It’s the fault of the North Korean governnt. Because there’s a pervasive belief that if you save money, you won’t get it back, no one entrusts their money to the banks.”
“.......”
“Money needs to circulate for the economy to live. That’s correct. It’s a basic principle of a market economy. But that requires trust. Right now, North Korean residents don’t trust the banks, and they don’t trust the governnt. Restoring trust has to co first.”
Jang Songthaek let out a deep sigh.
He knew as well that through four previous currency reforms, the state had practically looted the people’s money.
It was uncertain whether people who had learned such injustice would willingly accept another currency reform—which was why he was asking for advice.
“President Kim. How can we restore trust? No matter how much I think about it, I can’t find an answer. Even trying to introduce a market economy feels overwhelming. If we introduce a market economy as things are now, no one will go to the banks anyway.”
Fixing North Korea’s economic problems couldn’t be done by reforming just one or two things.
Above all else, the biggest problem was the complete lack of trust in the state.
I didn’t answer Jang Songthaek imdiately. I thought it through.
‘No matter how urgent things are, I never expected him to pull out the currency reform card this early.’
But since the topic had already co up, it had to be done properly. Because once it failed, there wouldn’t be a second chance.
“Do you realize that you may have to face backlash from the vested interests? The problems aren’t limited to currency alone.”
“If they resist, I can suppress them with force. But the people are different. If the people rise up, blood will inevitably be shed. I don’t want that.”
“Yes, that’s right. If you resort to ard suppression, everything we’ve discussed so far will co to a complete halt.”
No matter how I thought about it, only worst-case scenarios kept circling in my head.
Reading my expression, Jang Songthaek let out another long sigh.
“It seems you’re the sa. No matter how much you think about it, there’s no clear solution. Please, I ask you for good advice.”
“Ha...... I can’t say this with certainty, since I’m not an expert in that field. If you truly intend to carry out a genuine currency reform, I’ll send experts to Pyongyang.”
If this could be solved with money alone, it wouldn’t be this complicated.
In situations like this, there was no choice but to seek solutions through experts.
“Consult with the experts and then make your decision. And the purpose must never be to take the people’s money, like I said earlier. Can you promise that?”
“Will a good solution really co out of it?”
Perhaps frustrated that I was telling him to take the difficult path instead of the easy one, his expression remained dark.
“If you ask for my opinion, it’s simple. Carry out the currency reform properly. If you consult with experts, it will be possible to minimize the shock and successfully stabilize the reform.”
Only then did a faint smile appear on Jang Songthaek’s face.
“Ha...... I hope it really can be done that way.”
“At the sa ti, stop the use of dollars at Party-run restaurants and shops. It’s absurd to tell the people to use North Korean currency when even governnt-run establishnts accept dollars.”
You couldn’t expect a currency reform to succeed when even state-run stores were using dollars.
“You’ll also need to overhaul the exchange rate system. For North Korea’s currency to be recognized on the international market, an appropriate system is required. That too must be reford.”
“Is there a way?”
“That’s sothing that will also require consultation with experts. I think it would be unrealistic for North Korea to abruptly switch to a floating exchange rate system.”
Jang Songthaek nodded quickly in agreent, and I continued.
“For now, maintain the peg system, but enforce it strictly. The authorities must intervene directly to prevent the market exchange rate from rising far above the benchmark rate, while allowing foreign exchange to be traded freely. You can’t keep running things by turning a blind eye like you do now.”
Countries with weak economic foundations often adopt a system of pegging their currency to that of a more stable nation in order to control prices.
This was common among countries that had once been European colonies, which pegged their currencies to those of their forr rulers.
There were also many examples of oil-producing countries fixing their currencies to the dollar.
The main reason countries adopted a peg system was to eliminate uncertainty in exchange rate fluctuations, thereby facilitating trade and capital flows.
‘Of course, a peg system doesn’t have only advantages.......’
If it were all upside, every country would have adopted it.
The disadvantages were just as clear.
If the value of the pegged currency fluctuated sharply, the dostic currency would fluctuate sharply as well.
Moreover, because the value of the dostic currency changed passively, it failed to properly reflect the country’s own economic conditions or export competitiveness.
Still, North Korea had no choice but to maintain a peg system for now.
Instead, it had to resolve the abnormal situation where the gap between the official exchange rate and the market rate was as much as fiftyfold.
If they could just lower the value of the dollar in the black market, things would beco much easier. But since the state blocked foreign exchange trading, the dollar’s value in the black market inevitably soared.
“Chairman, can you crack down on the black-market currency dealers?”
“If we really set our minds to it, of course we could. We simply haven’t bothered. To succeed in currency reform, we’d have to arrest all illegal currency traders. Without dealing with them, success would be impossible.”
Jang Songthaek nodded along with my words.
“Good. All of this must be prepared ticulously through consultations with experts. And don’t disclose what you’re doing even to your closest aides. They could beco the biggest variable.”
“I’ll do that.”
“And.......”
After that, I continued to give Jang Songthaek various pieces of advice.
He listened carefully, and we continued our discussions until dawn.
I didn’t know how much of what I said he would actually follow through on, but I told him everything I could.
If he followed my advice faithfully, North Korea would be able to establish a market economy in the near future.
Only when dawn ca did I finally leave through the underground parking garage.
“Please pull over for a mont.”
After leaving the hotel and reaching the main road, I asked the driver to stop briefly.
The car ca to a halt by the roadside, and I stepped out, drawing in a deep breath.
As cold dawn air stung my nose, I turned my head toward the hotel where Jang Songthaek was staying.
Perhaps lost in thought, words slipped out of my mouth without realizing it.
“Is Jang Songthaek truly a rightful leader, or just a drear walking through illusions? Was it really the right choice to make him the supre leader of North Korea?”
Then Manager Ma, who had been standing silently beside , answered.
“No one can know the future. But Boss, you did what only you could do. And because of that, the supre leader of North Korea has co down to Seoul and is staying here. That fact will never change.”
His firm response—telling to think only of what I had done—made laugh.
It seed that today’s eting had unsettled my thoughts more than I realized.
‘I never expected Jang Songthaek to pull out the currency reform card, and I didn’t know he’d been agonizing over it alone this much.’
All I had been thinking about was extracting economic benefits from North Korea.
Sohow, I had ended up becoming his economics teacher as well.
I pulled my phone from my chest pocket and dialed a speed number.
A mont later, a familiar voice ca through the receiver.
— Oh. Muhyuk.
“Hyung. Are you busy? Did I call too late? It’s evening over there, right?”
— No. The market’s about to close, so it’s actually relaxed. Evenings are busier. There are parties every day—it’s election season.
Han Kyungyeong replied smoothly.
“Did you set up a eting with Senator Barack Obama?”
— Yeah. But are you really thinking of eting him? Why not et Hillary and support her instead? I went to a few Democratic Party events recently, and the mainstream Democrats are clinging tightly to Hillary. They’re already assuming President Bush will be re-elected, even though the election hasn’t even happened yet. The mood is that this election is basically a write-off.
“That can’t be.”
— I’m serious. You’ll see if you co here yourself.
In my previous life, President Bush had narrowly won the election.
But unlike before, his approval ratings were high this ti. Was that why the Democrats were already giving up?
Either way, it wasn’t Hillary.
“No matter what, it’s not Hillary. The presidential election isn’t over yet, and even if this election ends in a crushing defeat for the Democrats, there are still four years left. Politics is a living thing—you never know how it’ll change in that ti. I get the sense of a great politician from Barack Obama. I haven’t t him yet, but still. I’ll et him myself and then decide whether to support him.”
— You really do go against expectations every ti.
For the first ti in a while, I could hear genuine admiration in Han Kyungyeong’s voice. I chuckled softly and asked again.
“So, did you set up the eting?”
— Yeah. You’ll be in Korea until the National Assembly elections are over, right? I scheduled it for after that. Late April should work.
“Good. Let’s grab a drink together then—it’s been a while. But more importantly, can you recruit a currency expert we can secretly send to Pyongyang?”
— ......Currency? Pyongyang?
“Yeah. Soone who can advise Jang Songthaek directly. I don’t care how high the salary is, as long as they’re unquestionably capable and know how to keep their mouth shut. Can you look into it?”
— Hey... no way. It’s not what I think it is, right?
Even without saying much, Han Kyungyeong seed to catch on.
He really was sharp. I pulled up one corner of my mouth in a grin and replied.
“That’s right. Exactly what you’re thinking.”
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