Chapter 638: I Think It’s a Great Policy

One week before the groundbreaking ceremony of the Kaesong Industrial Complex, news of North Korea's currency reform finally reached South Korea.

The public broadcaster was airing a special program on the matter.

"North Korea has implemented currency reform. After you check the official announcement, we'll have a discussion about it."

The station seemed to be planning to bring in experts to discuss North Korea's currency reform.

The screen transitioned from the desk to a video segment.

Ri Chun-hee, the announcer from Korean Central TV, appeared to represent the party's viewpoint.

— Ahead of the historic North-South summit and the groundbreaking ceremony for the Kaesong Industrial Complex…

Ri Chun-hee's distinctive voice resonated throughout the broadcast.

She was the face of North Korea, having served as an announcer since the 1970s, acting as the mouthpiece for the Kim family.

Now, she was likely serving as a mouthpiece for Jang Seong-taek instead of the Kim dynasty, but her familiar voice remained unchanged.

— Thus, dear Comrade Jang Seong-taek, the Chairman of the National Defense Commission, has decided to carry out currency reform.

Ri Chun-hee spent some time explaining the rationale behind the currency reform.

North Korea had enacted a policy to exchange 100 old won for 1 new won.

This was simply a method of denomination reduction that was no different from the past.

However, there were differences from previous reforms.

Previously, each household was limited to exchanging only 100,000 won, but this time there were no such restrictions.

Whether Jang Seong-taek accepted the recommendations from the advisory group, the content of the currency reform plan seemed fairly reasonable.

A 100:1 denomination rate. There were no restrictions on the amount exchanged, and the source of the funds wasn't questioned either.

The reform plan focused solely on currency exchange.

But they strictly controlled the dollar.

— The U.S. dollar and the republic won are fixed at a rate of 1:1000…

North Korea pegged the dollar to 1,000 won and mandated that the exchange must take place in the new currency within a month.

Additionally, they completely prohibited dollar transactions within the country, stating that all shops operated by the party would also not accept dollars.

Instead, during the grace period, they introduced an enticing offer to exchange dollars at a rate of 1,200 won per dollar.

However, after the grace period ends, using dollars in the Republic could lead to the maximum penalty of death.

Alongside this, they announced various economic policies.

Notably, they established a tax for the people working in the Kaesong Industrial Complex.

It seemed they intended to collect the wages and deduct taxes before converting them into won for payment.

Though they had yet to officially recognize private property, once they started collecting taxes, they would inevitably have to acknowledge it.

The policies being implemented seemed aimed at minimizing noise beforehand.

After the broadcast ended, the screen switched back to the desk.

The host, having fully viewed the video from Korean Central TV, posed a question to the panelists.

"Lee Myeong-su, I'm interested in your opinion. You've successfully conducted the North-South summit and the Kaesong Industrial Complex project. What do you think of this currency reform?"

Among the four panelists, Lee Myeong-su confidently occupied a prominent seat.

"I think it's a great policy. Currency is the foundation of a country's economy. Money needs to circulate for the economy to thrive. I expect that this policy will bring the money hiding in the people's cabinets into the market. The lack of restrictions on the amount that can be exchanged and the absence of questions about the source proves that this currency reform bears no political interest."

The host nodded at Lee Myeong-su's opinion before firing a sharp question.

"Just because they don't ask about the source doesn't mean the authorities will be unaware of large amounts being exchanged. Isn't it possible that significant exchangers may face disadvantages?"

Upon the host's point, Lee Myeong-su nodded.

"That is a concern we cannot overlook. However, most citizens probably do not possess over 1 million won. Excluding those who might be hiding money, isn't the economic crisis in North Korea well-known? The currency reform is one of the policies aimed at overcoming this economic hardship. I don't believe honest citizens will be affected by a policy implemented to revitalize the economy."

Lee Myeong-su's statement was sound.

In a severely economically distressed North Korea, it was realistically difficult for the average citizen to possess more than 1 million won.

Those exchanging vast sums were likely to be from the upper echelons or those who had accumulated wealth through other means.

The host nodded in agreement and shifted to another question.

"However, I understand that currency reforms often lead to various side effects. For instance, inflation may occur due to suddenly reduced currency units, and confusion might escalate during the period of using both old and new currency. What are your thoughts on this, sir?"

Since Lee Myeong-su was the only well-known face among the panel, it was inevitable that the questions were directed mostly at him.

"There are no policies without side effects. The fact that North Korea's won has already lost value is crucial. Now, as they attempt to open their economy, if they don't execute a currency reform, confusion will only increase. It would be better for the citizens of North Korea to minimize side effects and anchor the reform beforehand. As you can see from the accompanying economic policies, this currency reform is not politically motivated; it is a policy aimed at economic rejuvenation."

Lee Myeong-su confidently voiced his unfiltered thoughts.

Though he wasn't an economic expert, he focused solely on the positive effects that could come from the currency reform rather than its issues.

After hearing Lee Myeong-su's remarks, the host turned to the invited panelists who were economic experts.

"Professor Min-woo, what do you think of Lee Myeong-su's opinion?"

The gray-haired Min-woo had been teaching economics at Korea University for over 30 years.

"It's valid but overly optimistic. "

"Could you elaborate on which aspects?"

"I don't know much about politics, nor do I care. However, I feel it necessary to speak, even if it might sound political this time."

Glancing at Lee Myeong-su, Min-woo adjusted his glasses and said,

"First of all, the currency reform is so poorly executed that I don't even know where to begin addressing its problems."

Unlike Lee Myeong-su, Min-woo took considerable time to express the issues with the currency reform.

"Are they pegging to the dollar? One of the major reasons for the foreign exchange crisis that hit our Republic a few years ago was the fixed exchange rate. Not only our country but also Mexico, Thailand, Indonesia, Russia, Brazil, and even Turkey have all abandoned fixed exchange rates recently. Why do you think there has been an increase in the number of countries that have abandoned fixed exchange rates in just the last decade? Of course, fixed exchange rate systems aren't without merits. However, now everyone knows that their cons outnumber their pros. Didn't we clearly see that this time? Yet, opting for a fixed exchange rate is not a wise choice. Advocating for economic openness while choosing a fixed exchange rate— I just can't understand it."

While Min-woo continued to present his negative opinions and flaunt his knowledge, Lee Myeong-su slightly lowered his head.

Checking his phone under the table, the host called out to him.

"Lee Myeong-su?"

Responding to the host's call, Lee Myeong-su lifted his head.

"Yes."

"Do you have any rebuttals to what the professor mentioned?"

"How could I convince Professor Min-woo on economic policies? But theory differs from reality in economics. If it were possible to implement economic policies according to what's written in the books and make everyone happy, we would all be doing that. Reality doesn't work that way. I don't diverge much from the professor's thoughts regarding fixed exchange rates. However, you need to understand that this is the only option available for North Korea, which just decided to embrace economic openness. In North Korea, where the economy has collapsed to the point that there's no further to fall, I believe there isn't any other option. For North Korea, we need to focus on reality, not the books."

Lee Myeong-su's remarks were quite aggressive, prompting Min-woo to glare back at him.

"Are you teaching me, Congressman?"

"Of course not. As I said earlier, how could I win against you in economics, professor? I'm simply stating that politically and realistically there are no other options. That's all I want to convey."

"Alright. Let's talk about the currency reform in our country by taking the 1963 reform as an example. Back then, the currency reform was conducted in a manner not too different from what North Korea is doing now. What were the results? The economy cannot be approached so simply."

Raising his voice, Min-woo mentioned the currency reform that had previously taken place in South Korea.

However, Lee Myeong-su continued to face him with a smile.

"Well, there are many differences compared to that currency reform. We didn't freeze deposits by force…"

"Wait a second. We're discussing fixed exchange rates, so why is that coming up?"

After a prolonged back-and-forth, the host had to intervene to calm the heated debate.

"Both of you, please calm down. The atmosphere seems a bit too heated. To summarize, while there may be issues with the policy, Congressman Lee believes there's no better option available, whereas Professor Min-woo thinks there are better alternatives, citing political reasons for the current choices."

The host hurriedly summarized the discussion and proceeded to ask the same question to the other panelists. They all began to express their opinions.

A short while later, a major issue regarding this special broadcast arose for the panelists.

"There are those who argue that South Korea also needs to discuss currency reform, citing that the currency unit is too large for the economic scale. What do the panelists think about this?"

The unexpected question left everyone startled.

However, unlike the other panelists, Lee Myeong-su maintained a calm demeanor as if he had anticipated this question all along.

"First, I'd like to hear Professor Min-woo's opinion as an expert."

Min-woo, perhaps not expecting the first question to be directed at him, cleared his throat before responding.

"I know that some economists make such arguments. However, considering the characteristics of our country, that is absolutely impossible. Instead, it would be better to circulate high-denomination bills that are currently being discussed as soon as possible."

"Why do you think so?"

"We've already experienced numerous side effects from past currency reforms. There's no reason to aggravate confusion again through another currency reform."

Min-woo firmly rejected the notion of currency reform.

"Currency reform lacks enough benefits to justify the side effects. If the government declares a currency reform, I will be at the forefront of opposition."

Other panelists also shared negative opinions about South Korea's currency reform.

Even those who praised North Korea's currency reform flatly stated that there was no point in discussing South Korea's currency reform.

"Finally, let's hear Congressman Lee's thoughts on this matter."

Lee Myeong-su smiled and met the host's gaze.

"Well, I haven't really thought much about currency reform."

Lee Myeong-su's answer was rather vague. The host didn't let it slide and asked again.

"Does that mean you're neither agreeing nor opposing?"

"I haven't thought about it, but I do somewhat agree with the argument that we should reduce the currency unit."

Due to the failure of the 1963 currency reform, it had become an unwritten rule for politicians in South Korea not to express their opinions on currency reform.

Yet, Lee Myeong-su boldly shattered that unwritten rule.