Daily NK Listed below are items related to Republic of Korea. And the laws that do exist don’t really mean much if there’s no credible mechanism to enforce them. In that way, they’re able to assess the costs of their inputs in the world market (or at least China), and know how much they need to charge to make a profit or break even. The big four Chinese State-owned banks have stopped providing financial services to new North Korean clients, according to branch staff, amid US concerns that the Chinese government has not been tough enough over North Korea’s repeated nuclear tests. Because the bank accounts of North Koreans residing in China are being closed, North Korean laborers are having difficulties remitting money back home. To Silberstein, this has a somewhat realistic ring to it. Daily NK 2018-08-01. Nevertheless, it seems that they have enforced this strategy, which in their final consequence makes North Korea less of a stakeholder of cooperative international relations. Lee, Y., Rhee, C. & Sung, T. Fiscal policy in Korea: Before and after the financial crisis. Correspondence to And the highest denomination of North Korean won in circulation is the 5,000 won note, which has a market value of around 60 US cents, hardly appropriate for anything more groceries. Subscription will auto renew annually. Read the full story here: Tax Base Variability and Procyclical Fiscal Policy. European Economic Review, forthcoming. IMF Staff Papers, 30, (June), 306–349. The USD took a dive late last month, but it’s been fluctuating quite significantly before that as well, which would be more visible if not for the recent dive in the graph: KPW-USD rates in three North Korean cities. Update: News for Investors—promoting SMEs with new capital market instrument, May 2003. www.kfw.de. The Polish Treasury Department told VOA’s Korean Service that Poland held talks with North Korea on a debt write-off in 2011 and the North implemented what it was required to do under the agreement the same year. The idea is to align domestic input prices for manufacturing, and consumer goods prices, with prevailing prices on international markets. Reactions by monetary authorities in the face of the crisis have been substantial and there may be a case for monetary authorities to support fiscal expansion. Korea Times PubMed Google Scholar. “Rice prices in most markets in Pyongyang are declining, with more than 70% of rice being imported from China. “Recently, the changes have been so frenzied that it’s not exaggerating to say that the prices in the afternoon will be different from the prices in the morning.”, “Wholesalers at the Pyongsong Market whose main patrons are other wholesalers throughout the country are complaining about the impact of the fluctuations in the exchange rate,” continued the source. Journal of Economic Perspectives, 3, 73–93. One in-country source told Daily NK: “Even ordinary sellers who have long conducted relatively stable transactions in foreign currency are now afraid of losses because of dramatic fluctuations in the exchange rate,” the source told Daily NK. North Korean Economy Watch is proudly powered by WordPress Entries (RSS) and Comments (RSS). (1994). Two Chinese businesspeople who run companies in North Korea — one of whom is based in the Chinese border town of Hunchun and one in Pyongyang — said all their transactions, such as payments to North Korean staff, were made in cash in Chinese renminbi, avoiding the need to have dealings between North Korean and Chinese banks. But on the black market, $1 (107 yen) fetches about 8,000 won. The government maintains price ceilings on a range of commodities, at least that’s what people inside the country say. “Unlike other countries where a series of steps have been taken before introducing mobile banking, North Korea is skipping them since smartphones are already prevalent in the country,” the researcher said. A similar prediction was made in the Joong-Ang Ilbo a couple of weeks ago: In 2017, the North’s exports to China — the only remaining market it officially trades with — plunged by 37 percent on-year. There are some “commercial” banks, but they only deal with foreign currency, not domestic currency, … So there’s certainly room for optimism here too. Joong-Ang Ilbo This practice has ended as well.”. Kim, J. Y. IMF (2005). For example, with the payment cards that have popped up in recent years, people by definition have to deposit their cash with state-owned banks to use these cards, which many may do simply out of convenience. Kim’s forecast is based on the latest edition of the North Korean quarterly journal Economic Research, issued in June, which was about establishing a mobile banking system for smartphone users. Chung, U. Off the top of my head, this seems unlikely. Nam, Y.-S., & Jones, R. (2003). One possibility is that have significant cash reserves of RMB…. The new smartphone-based financial service would enable North Korean residents to check (their) bank accounts, withdraw cash, transfer money as well as pay at shops. Changyong Rhee. Also relevant to the measure is that North Korean-Chinese collaborative ventures have been banned from using bank accounts, so seed money is now required in cash. EIF Corporate Operational Plan: 2004–2006 January, 2004. www.eif.org. Now, it’s entirely possible that people are primarily depositing money for other reasons than savings. Reforming Fiscal Management System in Korea, mimeo. Major enterprises will also know how much their inputs costs in foreign exchange, and a sense of how much their products would sell for on the world market. This spending is an attempt to help boost their local economy to better cope with a slow global recovery from a continued slump in domestic demand (expansionary policy). It looks like it, but we don’t know for sure if they do. It’s certainly notable if more North Koreans trust that state-owned banks won’t confiscate the hard-earned cash that they choose to deposit, but it might not be a revolutionary development. Yuan Yang and Xinning Liu Korea’s fiscal policy and public debt management will pose no immediate threat to monetary policy and financial stability. Immediate online access to all issues from 2019. UPDATE 1 (2017-9-11): According to the Financial Times: China’s biggest banks have banned North Koreans from opening new accounts in an unprecedented move to clamp down on financial flows with the country’s unruly neighbour. The market exchange has not once moved out of its ordinary – also remarkably stabile – territory over the past few years, as the following graph shows with clarity: Won for USD-rates on the markets, 2009–September 2018. Budget Deficits: Rhetoric and reality. Alone, this increase says little. The Public Sector in Korea: Coverage, Measurement, and Classification. European Investment Fund (2004). A March 2017 Radio Free Asia (RFA) investigation reported a similar trend, noting, “Private Chinese banks are beginning to close bank accounts held by North Korean nationals. Most of North Korean residents deposit their money with individual money traders, making it hard for the North Korean regime to account for the money it prints, Kim said. Read the full story here: Agenor, P.-R., McDermott, C. J., & Prasad, E. S. (1999). The infrastructure, once established, will also enable confirming of payments and settlements to both buyers and sellers. The Changing Cyclical Variability of Economic Activity in the United States, NBER working paper no. Speaking with my friend and colleague Peter Ward, a researcher of North Korean economic policy under Kim Jong-un and avid reader of North Korean economics journals, he explained a third possibility, partially in line with the latter hypothesis posed above. However, 52.5 percent of defectors after 2013 said the yuan is chiefly used nowadays. The won is still remarkably stabile, but over the past few weeks, it’s gone up to higher levels than at any point through 2017 and 2018. 2018-2-21, The effect of sanctions (2004). Stein, E., Talvi, E., & Grisanti, A. Won for US-dollars at market rates, 2017–September 2018. - 205.186.150.104. VOA (Voice of America) reported on January 26 that North Korea’s total rice imports from China amounted to 4.2 million tons last year (2016), a 2.4-fold increase over the previous year (2015). Data source: Daily NK. Quarterly Journal of Economics, 45, 1–25. Tags:Bonds, Corona Posted in Finance, Fiscal & monetary policy, International trade, Political economy | Comments Closed, By Benjamin Katzeff Silberstein and Peter Ward. 2018-4-13, Posted in China, Fiscal & monetary policy, International trade | Comments Closed. The central government isn’t constantly borrowing money from the central bank to pump into SOEs, so the amount of money created by the central bank to lend to SOEs has gone down a lot. Upon approval, they seek out cooperation and investment from Chinese investors. Unemployment: 25.6%. Measuring the Cyclicality of Real Wages: How Important is Composition Bias. 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