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(LEAD) N. Korea confirms currency reform, vows to normalize economy
By Kim Hyun
SEOUL, Dec. 4 (Yonhap) -- North Korea confirmed its surprise currency reform and said the move seeks to tackle inflation and normalize an economy that has dilapidated since the 1990s, a pro-Pyongyang newspaper said Friday, citing an official at the North's Central Bank.
"This currency exchange is aimed at first raising the value of our currency to smoothen its circulation," the bank official, named Jo Song-hyon, was quoted as saying in an interview held Thursday with the Choson Sinbo. The Japan-based paper has a branch in Pyongyang.
The interview was the first confirmation by North Korea of Monday's redenomination, while state media still remained silent.
The official said North Korea has suffered economic hardship under the combined effect of international sanctions, natural disasters and the fall of the communist bloc in the 1990s.
"The imperialists' vicious isolation and suffocation maneuvers against us, subsequent natural disasters and the fall of the socialist market have posed great impediments to the normal economic development of our country," Jo said.
Productivity fell and the government was forced to spend lavishly to strengthen its military and implement public policies, the official said.
"As a result, the currency has inflated and an abnormal imbalance in the people's economic development has ensued," the official said.
The exchange to new banknotes will be available for seven days until Sunday. "Bills that were not exchanged during the period and our currency that has been illegally taken outside the country will become entirely invalid," the official said.
The exchange rate to new denominations was 100 to one, but bank deposits will receive benefits of a 10 to one rate in a policy to encourage savings, he said.
Prices of market commodities will be returned to the level of the 2002 economic reform, after which inflation mounted, he said.
The Choson Sinbo ran images of the new banknotes that feature pictures of the country's founder Kim Il-sung and his birth home in Pyongyang. The Central bank issues notes in 5,000 won, 2,000 won, 1,000 won, 100 won, 50 won and 10 won, and lower denominations are in coins, the report said.
hkim@yna.co.kr
(END)
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