ID :
109471
Wed, 03/03/2010 - 09:20
Auther :

N. Korea acknowledges failure of currency reform

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BEIJING, March 2 Kyodo -
North Korea has acknowledged the failure of the currency reform it conducted
last November, saying it caused confusion in the supply of money and the
distribution of goods, sources familiar with China-North Korea relations said
Tuesday.
North Korea made the acknowledgement in a note sent to its diplomatic missions
abroad in mid-February, the sources said.
The note urged North Koreans to ''get united and overcome the difficulty,''
they said.
It is rare for North Korea to acknowledge a failure of economic policy.
North Korean officials ''do not need to deny'' the confusion sparked by the
redenomination of the currency when explaining it externally, the notification
said, according to the sources.
By acknowledging the problem, Pyongyang is believed to have attempted to ease a
sense of alarm among foreign companies about trading with and investing in
North Korea.
On Nov. 30, North Korea redenominated the won, knocking two zeros off its bank
notes.
Despite the redenomination, Pyongyang failed to curb inflation and caused
confusion in the supply of goods, the sources quoted North Korea as telling
Chinese investors and trading partners.
The sources said North Korea also told Chinese investors and trading partners
that it carried out the currency reform ''without sufficient preparation.''
The acknowledgement suggests that the failure dealt a severe blow to North
Korea's efforts to rebuild the economy, a key to achieving Pyongyang's goal of
''opening the gate to a great, prosperous and powerful socialist nation'' in
2012.
North Korea admitted that information about the currency reform had been leaked
prior to implementation.
The leak prompted some of the new rich in North Korea to try to move their
money to China and other countries, fearing that their foreign currency
holdings might be confiscated.
The action prompted security authorities to tighten control of the border with
China late last year, sparking speculation that the North Korean leader may
visit China as early as in January.
Senior officials of the Workers' Party of Korea and leader Kim Jong Il's aides
directly reported to Kim about the confusion from the failed currency reform,
leading to the dismissal in January of Pak Nam Gi, director at the party's
Financial Planning Department, and others involved in the project, according to
diplomatic sources.
==Kyodo

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