◆ Is Foreign Currency Black Market Control the Motive? Prices Rising Too
So how is the "cashless" policy being pursued by the Kim Jong-un regime — known domestically as the "cash elimination policy" — being received inside North Korea? Reporting Partner B assessed it as connected to foreign currency controls:
"The black-market exchange rate for Chinese yuan between individuals changes once or twice a day. The idea is to bring payment systems under centralized card-based management and cut off private foreign currency transactions at the source."
The reasoning is that as cash use declines and card use increases, enabling the tracking and management of cash flows, it becomes possible to reduce the foreign currency black market dealings that are conducted primarily through cash.
Reporting Partner A says that transactions between enterprises have recently also been conducted through dedicated enterprise cards, and argues this is fueling price increases:
"Enterprise cards have been issued, and because the state loads balances onto them by essentially lending money to production units, that money flows out into the market and is driving up prices."
While the value of North Korean won has been on a persistent downward trend, over just the past month it has plummeted nearly 30 percent — from 35,000 won per dollar (as surveyed on January 30) to 45,000 won per dollar (as surveyed on March 6).
◆ The Aggressive Cashless Policy — What Is Its Purpose?
The North Korean government has been forcefully pursuing cashlessness as a state policy, including through the enactment of an Electronic Payments Law in 2021. While cashless systems are a global trend, the North Korean government's approach is exceptional in that it carries coercive force.
So why is the Kim Jong-un regime so intent on spreading electronic payments?
The fundamental reason is the state's desire to monitor the flow of money throughout society — with the aim of strengthening control and surveillance over the population while stimulating currency circulation.
How far the Kim Jong-un regime's coercive push for electronic payments will ultimately succeed remains to be seen.
What is clear, however, is that the state's forcible cashless policy, combined with the ongoing depreciation of the won, is deepening the economic hardship faced by ordinary North Koreans.
※ ASIAPRESS communicates with its reporting partners through Chinese cell phones smuggled into North Korea.
