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US dollar popular on DPRK black market

Tuesday, September 7th, 2010

According to the Daily NK:

An inside source reports that popular dependence on foreign currencies for trading continues in spite of last year’s currency redenomination, to the extent that market traders are openly setting separate prices in U.S. dollars or Yuan alongside the depreciating North Korean won.

The inside source from Pyongyang explained to The Daily NK on September 5th, “In recent market trading, usage of dollars has increased rapidly, and now market prices are being set according to a dollar standard. Even when money is loaned and repaid, the amount for repayment is decided based on the dollar standard.”

As of September 2nd, the exchange rate in Pyongyang was around 150,000 won to $100, as North Korean people refer to it. Loans made in North Korean won are always calculated according to the value of the dollar, and the value of the loan fluctuates accordingly.

The source added, “Recently, market merchants have been setting separate Yuan or dollar prices, except for on rice, corn, and ingredients for side-dishes. The fabric stalls in Sunkyo market in Pyongyang put up all their prices in dollars.”

“Especially in the case of wholesalers,” he added, “they are all trading in dollars or Yuan. They depend on foreign currency since the value of the North Korean currency has fallen so badly and also because there is a lack of large-denomination bills.”

Since 2000, Yuan has been in common use alongside the North Korean currency in border regions. The popularity of dollars is higher in Pyongyang and North and South Hwanghae Provinces. Especially in cases where the unit price of the item is high, such as for home appliances or industrial products, most are dealt with in dollars or Yuan.

However, this is also now spreading to lower value consumer goods like shoes and clothing. Dollar and Yuan prices are applied to such items even when the seller is not a foreign currency store or international hotel.

Despite the fact that the North Korean currency was redenominated at a rate of 100:1 on November 30th, 2009, the monetary authorities have not been able to break North Korea’s inflationary cycle. Currently, rice in North Korean markets goes for around 900 won per kilo, which is only around half the 2,000 won it cost prior to the redenomination, far from the approximately 20 won it would cost in a more stable economy.

The source explained, “The value of the won is unstable, making foreign currency exchange rates more volatile. So merchants are selling products at higher prices than normal to compensate for their losses. This phenomenon is creating in them the mentality of raising their product prices.”

He also emphasized, “Prices for all products imported from China are set in dollars or Yuan. Considering the fact more than 90% of products in the North Korean market come from China, it looks like a world in which the North Korean currency is useless is coming.”

The source added, “Since Yuan are used quite commonly in North Hamkyung Province, Yangkang Province, and Shinuiju, a phrase, ‘This is Chinese land!’ is spreading. At the same time, since the dollar is used a lot in Pyongyang, Sariwon, Haeju, and Wonsan, another joke suggesting that ‘here is U.S. soil!’ is going around as well.”

IFES also covered this story:

With last November’s currency reform, North Korea’s dependence on foreign currency has increased to the point that market prices today are determined in terms of dollars or yuan.

According to Daily NK’s internal sources in Pyongyang, a recent surge in the use of dollars in market transactions has meant that market prices of goods are now determined based on dollars. Moreover, it has been revealed that individuals lending and borrowing money from one another collect and pay the interest in dollars.

As of September 2, the exchange rate in Pyongyang was about 100 US dollars to 150,000 won. If someone was to borrow 150,000 North Korean won from a friend, he would later have to repay that loan in however much North Korean won is equivalent to 100 US dollars at the time.

The source said, “These days, the merchants in the market charge everything in yuan and dollars, except for rice, corn or side dishes,” and, “Clothing stores in Pyongyang’s Seonkyo Market have actually put up signs indicating prices in dollars.”

The source added, “Wholesale merchants, especially, do all of their business in dollars or yuan now,” and “The value of North Korean money has fallen, and there are no more large bills anymore, so everyone is dependent on foreign currency.”

After 2000, the yuan and the North Korean won were both came into common use in the border area between North Korea and China, while the dollar became popular in Pyongyang and Hwanghae Province. Expensive items, such as electric home appliance or industrial goods, were more often than not bought and sold in terms of dollars or yuan, bypassing North Korean currency altogether.

However, recent trends show that the use of dollars and yuan has spread to the sale of shoes, clothes, and other everyday consumer goods. Stores put up signs indicating prices in dollars and yuan, once done exclusively by currency exchange shops or hotel restaurants frequented by foreigners.

Last year, North Korea depreciated its currency at a rate of 1:100 in an attempt to reform its currency, but the efforts to control inflation throughout the country failed. The price of rice in North Korean markets today is about 900 won per kilogram, about half the price it was before currency reform (about 2000 won per kilogram).
The source explained, “Because the value of the won is unstable, the exchange rate varies wildly. In order to not lose money, merchants have been fixing their prices higher than normal.”

The source emphasized, “Goods from China are all sold in dollars or yuan,” and “Considering that over 90% of the commodities circulating in the markets today are from China, it appears that North Korean money will be rendered useless in the near future.”

“In North Hamkyeong Province, Yangkang Province, and Sinuiju, where the yuan is often used, they say ‘This is Chinese land,’ and in Pyongyang, Sariwon, Haeju, and Wonsan, where the dollar is often used, they joke, ‘This is American land,’” added the [sic].

Read the full stories here:
North Korea’s Fiscal Sovereignty Collapsing
Daily NK
Park In-ho
9/6/2010

North Korea’s dependence on foreign currency increases
Institute for Far Eastern Studies
NK Brief No.10-09-07-2
9/7/2010

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Posted in Banking, Black markets, Finance, Fiscal & monetary policy, General markets (FMR: Farmers Market) | Comments Closed

Daily NK on Office 39

Monday, August 30th, 2010

Pictured above is the location of the First Caribbean International Bank

According to the Daily NK:

The existence of a secret bank account operated by the No.39 Department of the Chosun Workers’ Party has been publicly confirmed for the first time, bringing yet more attention to bear on the activities of banks in one of the western world’s renowned tax havens.

The No.39 Department, which is responsible for the management of Kim Jong Il’s private funds, holds the bank account with the British Virgin Islands branch of First Caribbean International Bank (FCIB), a prominent bank in the Caribbean region.

According to an expert source familiar with China and North Korea, the No. 39 Department’s secret overseas account exists under the name “Hana Holdings”. It is apparently held with the Road Town branch of the bank, which is based in Barbados and has branches in 17 countries.

Explaining the importance to North Korea of the No.39 Department account, the source told Daily NK, “Due to recent UN Security Council sanctions, the No. 39 Department is experiencing considerable difficulties with its overseas financial trade. Currently, excluding Chinese banks, their only active overseas account is that held with FirstCaribbean International Bank.”

Also, he added, “The only bank through which the No. 39 Department can make overseas transfers is FirstCaribbean International Bank in the British Virgin Islands, since their other secret bank accounts are all blocked.”

He said, “In cases of normal trade relationships with other companies, it used to be possible to transfer the money overseas from China. However, those routes are blocked as well. Since United Nation’s financial sanctions against North Korea make it difficult for North Korea to transfer money to accounts in third countries from Chinese banks, all foreign currency earning units including the No. 39 Department are experiencing the same difficulties.”

Generally, the No. 39 Department works by transferring money from secret overseas bank accounts to accounts with Chinese banks for money laundering.

The source explained, “No. 39 Department moves the management funds from third countries to FirstCaribbean International Bank, then sends the money to the Bank of China until it can be transferred to a North Korean bank or withdrawn.”

According to the source, the person in charge of transfers between FirstCaribbean International Bank and Bank of China is dispatched by the No. 39 Department under a false name. Also, the official allegedly travels to China frequently to deal with problems involving trade with the Chinese bank.

News of the FCIB account will not be too surprising to North Korea economy watchers. Entities in the British Virgin Islands were already suspected of doing business with the North Korean regime before this latest revelation because of the islands’ connection to the activities of Taepung International Investment Group.

The annual returns of the Taepung Group, as it is more commonly known, show that it was originally set up in September, 2006. However, it became better known early in 2010 when it was placed at the center of efforts to revive the North Korean economy through the creation of a state development bank.

Registered in Hong Kong, its only shareholder as of its 2010 Annual Return was Taepung International Investment Holdings Ltd, whose registered address is in Road Town, British Virgin Islands.

According to the same return, obtained by a keen observer of North Korea’s illegal activities, Ken Kato, the Taepung Group’s corporate secretary is Sai Ying Company Ltd, whose only shareholder, and corporate director, is JYBD Holdings Ltd. JYBD Holdings Ltd’s registered address is the same one in Road Town, British Virgin Islands.

This is not the first time that FirstCaribbean International Bank has run into trouble, either. In 2008, it was indicted on 113 charges of “failure to report suspicious transactions” between 2001 and 2005 by the Belize Financial Intelligence Unit (FIU).

However, the charges were dropped because, according to a Belize newspaper, they were threatening to destabilize the country’s financial sector. Instead, First International was ordered to pay for both an electronic reporting system for the country and the refurbishment of two parks.

There are known to be a substantial number of other North Korean accounts held in countries around the world. At the time of the report completed by the 1718 Committee (North Korea sanctions committee) under the UN Security Council last July, North Korean banks were said to hold a total of 39 accounts with 18 banks located in 14 countries. Allegedly, these accounts include a considerable number managed by the No. 39 Department.

17 of the 39 accounts were located with big Chinese banks like Bank of China, China Construction Bank and HSBC, according to the report. Bank of China in Macao had the largest number of North Korean accounts, while some other accounts were held with Beijing and Dandong branches.

In addition, at the time, North Korea had 18 accounts with 11 banks in 8 countries in Europe; Russia, Switzerland, Denmark, Hungary, Poland, Italy, Germany, and Belarus; also, it had one account each in Malaysia and Kazakhstan.

As the 1718 Committee report explained, “The DPRK… employs a broad range of techniques to mask its financial transactions, including the use of overseas entities, shell companies, informal transfer mechanisms, cash couriers and barter arrangements. However, it must still, in most cases, rely on access to the international financial system to complete its financial operations. In structuring these transactions, attempts are made to mix illicit transactions with otherwise legitimate business activities in such a way as to hide the illicit activity.”

And also according to the Daily NK:

The newly revealed secret overseas bank account held by the No. 39 Department is just one of several accounts set up in various locations around the world to manage Kim Jong Il’s funds.

However, due to the financial sanctions brought about by two nuclear tests and multiple missile launches, the No. 39 Department’s secret overseas accounts are continuously shrinking. As one North Korean source in China put it, “Due to United Nation’s financial sanction against North Korea, the No. 39 Department’s management of its overseas secret accounts has become difficult.”

Now, due to the Cheonan incident, the U.S. is planning to put in place “customized” financial sanctions which incorporate existing UN Security Council and EU financial sanctions, so the No. 39 Department’s overseas accounts will only get more difficult to manage in the future.

The No. 39 Department’s overseas accounts, which allegedly contribute much to Kim Jong Il’s governing funds, are prime targets for financial sanction since they are key to transferring those funds generated by illegal activity.

According to intelligence authorities, the No.39 Department has a bank account with Daesung Bank in Pyongyang, and manages capital in some of the world’s most influential banks in Macao, Hong Kong, Germany, Japan, and England through a subsidiary of Daesung Bank, Gold Star Bank (Geumbyeol Bank) in Vienna, Austria.

The $25 million which was frozen in Banco Delta Asia in 2005 was allegedly known to be some of Kim Jong Il’s governing funds managed by the No. 39 Department.

Radio Free Asia reports that even the Luxembourg government seems likely to implement any new sanctions, quoting them as saying, “We are keeping a close eye on the illegal activities which can take place through North Korea’s overseas accounts.”

The No. 39 Department has 17 overseas branches, 100 trading companies and banks under its auspices. They generate foreign currency through loyalty funds collected from each agency and management of hotels and foreign currency stores. Also, they trade the country’s natural resources including pine mushrooms, gold and silver.

The department is also in charge of the production of “supernotes,” high quality counterfeit $100 bills, and has a role in weapons and the illegal drugs trade.

The funds are mostly spent on the living costs of the Kim family and the patronage network required to maintain his coterie of high officials. In 2008, the sum of luxury goods purchased by North Korea was estimated to be more than $100 million. For example, immediately prior to the anniversary of Kim Il Sung’s birth on April 15th, North Korea imported approximately 200 high grade vehicles from China.

Since foreign currency generation started to become difficult due to the sanctions, Kim Jong Il has allegedly revived the No. 38 Department, which used to be in charge of overseas currency earning and was only merged with the No. 39 Department in September of 2009, and replaced the head of No. 39 Department with Jeon Il Choon, an old high school friend.

As Kim Kwang Jin, a North Korean defector who worked for the Northeast Asia Bank of North Korea, pointed out in a recent press interview, “The UN Security’s North Korea sanctions and the United States’ Banco Delta Asia sanctions must have caused the shrinking of North Korea’s overseas accounts. It is possible that North Korea could try to open accounts under phantom company names to continue with its financial trades.”

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Posted in Banking, Bureau 38, Bureau 39, Counterfeiting, Finance, Fiscal & monetary policy, Google Earth, Illicit activities, Korea Taepung International Investment Group (Daepung Investment Group) | Comments Closed

DPRK’s external debt

Thursday, August 19th, 2010

According to the Korea Herald:

North Korea watchers in the West estimate the North’s outstanding debts to be around $12 billion, two thirds of which is owed to former communist states.

In 2008, a ruling Grand National Party lawmaker had suggested allowing North Korea to pay back its loans from South Korea with mineral resources or development rights.

Rep. Kwon Young-se said during a parliamentary audit two years ago that North Korea’s debts amount to $18 billion, nearly as much as the country’s economic output in the year 2007.

About five percent of it, or $920 million, was borrowed from South Korea.

“Loans for North Korea’s economic development from socialist countries in the 1950s and 60s, and Western nations in the 1970s have accumulated with overdue interest on outstanding debts,” Kwon said.

“North Korea’s per capita debt is around 930,000 won, slightly less than the country’s annual per capita income of 1.07 million won.”

Last year, a top South Korean government official said Seoul could pay for tours to North Korea with commodities instead of cash.

He said the issue of paying cash to North Korea had to be reconsidered based on the U.N. Security Council Resolution 1874, which slapped tightened sanctions on the reclusive state as punishment for its nuclear and missile programs.

The crossborder tours have been suspended for the past two years after a South Korean tourist was shot to death in the North’s mountain resort.

Read the full sotry here:
North Korea cornered with snowballing debts
Korea Herald
Kim So-hyun
8/17/2010

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Posted in Banking, Debt, Finance, Fiscal & monetary policy, GDP statistics, Trade Statistics | Comments Closed

Dandong launches DPRK trade program

Thursday, August 19th, 2010

According to Reuters:

A northeast Chinese border city that is a key portal with isolated neighbour North Korea has launched a pilot scheme to settle export deals in China’s yuan currency, the city’s official newspaper said on Thursday.

North Korea’s struggling economy has come under greater strain after a chaotic attempt to re-denominate its currency last year hurt private traders and alarmed Chinese merchants.

The yuan’s trial use appears intended to boost Chinese exporters’ confidence in doing more above-the-table deals with the North, often a perilous gamble even in smoother times.

Many Chinese traders doing business with the North already use the yuan, dollar, euro in cash or even barter to settle export of food, clothes, appliances and other cheap goods in often informal or convoluted transactions. Smuggling and illicit deals are common along the border, marked by the Yalu River, a few dozen metres (feet) wide in many parts.

The Dandong Daily reported that approved exporters in Dandong will be able officially to carry out business in yuan.

The Chinese government announced in June that all of its trading partners would be able to invoice and settle imports and exports in yuan, but so far such transactions have been primarily confined to trade between China and Hong Kong.

“This means that state-designated export businesses in Dandong that engage in external trade can use the renminbi to settle transactions,” said the Chinese-language Dandong Daily (www.ddrb.cn) of the scheme, which began on Wednesday.

The renminbi is another name for the yuan.

“This will reduce exchange rate risks and the costs of doing business, and smooth out enjoying export tax rebate policies, as well as improving capital utilisation,” said the report.

The scheme will also cover approved small-scale exports passing through customs posts at Dandong, it said.

The new scheme will allow exporters to enjoy rebates and other benefits for trade, but will also depend on North Korean importers being allowed to deal legally in yuan.

Dandong lies on the Yalu, and at night its neon-lit riverfront faces the darkness of the electricity-starved North.

…

North Korea’s dependence on Chinese goods and aid has deepened as Pyongyang’s ties with South Korea have frayed.

According to Chinese customs data, in the first six months of 2010, China’s trade with North Korea was worth $1.3 billion (835.6 million pounds), a rise of 15.2 percent on the same time last year.

China’s exports to the North grew by a quarter, but its imports fell by 4.8 percent, the customs data show. As much as 70-80 percent of that trade passed through Dandong, according to earlier Chinese news reports, citing local customs officials.

Read the full story here:
China city launches yuan trade scheme with North Korea
Retuers
8/19/2010

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Posted in Banking, China, Finance, International trade | Comments Closed

DPRK trade bank sued for failure to settle debt

Monday, August 9th, 2010

UPDATE 8/9/2010: According to Yonhap:

A state-run North Korean bank has lost a lawsuit for not paying back a loan it borrowed from a Taiwanese bank nine years ago, the New York district court said Friday.

The District Court of New York confirmed it ordered the Foreign Trade Bank of Korea to pay compensations of just under US$6.77 million to the Mega International Commercial Bank (MICB) in a ruling made earlier in the week.

And as Josh notes: “By which they really mean the U.S. District Court for the Southern District of New York.”

Some additional case information may be found here.

As an aside, North Korea also recently lost another court case in the US.  Read more here.

ORIGINAL POST (5/6/2010): According to KBS:

The Taiwanese bank filed its lawsuit to claim some five million dollars in interest and principal on August 25th, 2001.

It is unclear whether the North Korean bank will repay the Taiwanese plaintiff, but North Korea experts say this will at least add to the crunch on North Korean finances.

Some reference information can be found here.

According to the Korea Times:

A state-run North Korean bank is facing trial in the United States for failing to pay a $5 million loan that it borrowed from a Taiwanese bank in 2001, according to sources Wednesday.

The District Court for the Southern District of New York ordered the Foreign Trade Bank (FTB) of North Korea to make a court appearance on May 17 and submit a proposed case management plan and scheduling order.

The FTB reportedly borrowed $5 million from the Mega International Commercial Bank (MICB) in Taiwan on Aug. 25, 2001 on the promise to amortize the principal and interest in three installments by Sept. 15, 2004.

No repayment was made until December 2008, when the FTB paid the MICB $100,000 to cover some of the interest. The North Korean bank has thus far paid off a total of $462,000 to the MICB, still owing $1.78 million in interest and $4.7 million in principal.

“It has been almost unprecedented for North Korea to be sued in a commercial dispute, though there were occasions that the North was asked to stand in U.S. courts for terrorist activities,” an official of the South Korean Consulate General in New York told Yonhap News.

The official said the litigation will hamper Pyongyang’s recent move to aggressively attract foreign investment in an effort to revive its flagging economy, given that obviously doubt will arise over its debt repayment capacity.

Despite a recent currency reform, the North’s economy remains in a parlous state as the U.N. sanctions have cut off virtually all sources of foreign currency.

Seoul has also suspended tours to the North’s popular tourist destination of Mt. Geumgang, following the shooting death of a South Korean tourist in the mountain resort in July 2008. The tours were a cash cow for the North, generating more than $500 million between 1998 and 2008.

On May 1, the FTB’s official exchange rate was 96.9 won per dollar, but it was traded at 180 won in Pyongyang and higher in other areas, demonstrating the instability of the North’s economy, according to the sources.

Since established in 1959, the bank has served as the reclusive regime’s main foreign exchange bank, they said. It has branch offices in France, Australia, Kuwait, Hong Kong and Beijing.

Read the full story here:
NK trade bank sued for failure to settle debt
Korea Times
5/5/2010

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Posted in Banking, Debt, Finance, Fiscal & monetary policy, Foreign Trade Bank, Lawsuits, USA | 1 Comment »

DPRK overseas financial organizations

Thursday, August 5th, 2010

They have been in the news quite a bit recently.

According to the Donga Ilbo:

The U.S. has reportedly confirmed that nine of the 15 financial institutions North Korea operates overseas are involved in illegal activity.

Accordingly, the nine and more than 20 other institutions and individuals, including financiers who oversee the institutions, will be subject to Washington’s new financial sanctions announced against Pyongyang.

A government source in Seoul said Wednesday, “The U.S. government and intelligence are pointing to Kim Tong Myong, president of Danchon Commercial Bank of the North. The bank helped to amass slush funds overseas for the North.”

“Washington judges that organizations subject to Executive Order 13382, which regulates weapons of mass destruction, are also involved in other activities, including the illegal trade of luxury goods and money laundering. The U.S. is considering including many such organizations in the new executive order.”

Under Executive Order 13382, three financial institutions and 18 trading companies were subject to financial sanctions. The imminent addition of six more North Korean financial institutions abroad will further put the Stalinist country in a bind.

On Washington’s plan to impose additional sanctions against Pyongyang, South Korean Foreign Minister Yu Myung-hwan said, “Measures designed to impose specific sanctions on organizations and individuals and freeze assets will come in two weeks.”

And according to the Choson Ilbo:

Hong Kong financial authorities are inspecting all banks in the territory to find out if North Korea’s Taepung International Investment Group has opened secret accounts there. Taepung has the unenviable task of attracting foreign investment to the North.

According to information obtained by the Chosun Ilbo, the Hong Kong Monetary Authority in late July asked banks to report no later than Aug. 3, if they had engaged in “any kind of transactions” with four companies over the past six years.

The four are Taepung International Investment Hong Kong, Taepung International Investment Holdings Virgin Islands, Taepung International Investment Group, and Taifung (Taepung’s Chinese pronunciation) International Investment Group.

This was the first time Taepung has been targeted for financial sanctions by a third country.

A source in Hong Kong said it seems authorities have asked all Hong Kong branches of about 190 banks from the U.S., Europe and Asia for data about the four Taepung affiliates and two Iranian firms.

Taepung Hong Kong is believed to be a paper company. In April it registered at Rm.# 2508, Lippo Centre, 89 Queensway, Hong Kong, but the only office at the address is a local law firm.

Read the full stories here:
US: 9 Illegal NK Financial Entities Abroad Confirmed
Donga Ilbo
8/5/2010

Hong Kong Looks for Secret N.Korean Accounts
Choson Ilbo
8/5/2010

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Posted in Banking, Finance, Fiscal & monetary policy, Hong Kong, Korea Taepung International Investment Group (Daepung Investment Group) | Comments Closed

More on upcoming US sanctions

Wednesday, August 4th, 2010

According to the AFP:

The United States is expected to blacklist three key North Korean figures suspected of handling secret funds for leader Kim Jong-Il as part of its new sanctions, a report said Wednesday.

Washington is devising the measures to punish the North for an alleged deadly March attack on a South Korean warship and to push it to abandon its nuclear weapons ambitions.

Yonhap news agency, quoting an unidentified South Korean government source, said one of the three officials is Kim Tong-Myong, head of the North’s Tanchon Commercial Bank.

“The US is paying special attention to three people, including Kim Tong-Myong, who operate North Korea’s secret funds abroad,” the source was quoted as saying.

“If they are included in the new sanctions, it could deal a blow to North Korea’s leadership.”

The foreign ministry had no comment on the report.

Washington also has evidence that nine North Korean financial institutions operating overseas and at least two trading firms have been used for illicit activities such as trading in conventional arms, luxury goods and counterfeit money, the source was quoted as saying.

Overall, the US is expected to add 10-20 North Korean entities and individuals to its blacklist, the report said.

Robert Einhorn, US State Department special adviser for non-proliferation and arms control, said Monday during a visit to Seoul the new measures would designate companies or individuals involved in the North’s illicit activities.

Any property or assets they possessed which were under US control could be blocked.

“By publicly naming these entities, these measures can have the broader effect of isolating them from the international financial and commercial system,” Einhorn said.

He named Tanchon Bank as one of several North Korean companies active overseas. The bank has already been designated by the US and the UN Security Council for suspected illicit activities.

South Korean Foreign Minister Yu Myung-Hwan said details of the new US sanctions will emerge soon.

“We’re expecting concrete measures within the next two weeks that will freeze assets of related North Korean individuals or companies and will prohibit third countries from dealing with such individuals or companies,” Yu told a local radio station.

South Korea, the United States and other countries, citing a multinational investigation, accuse the North of torpedoing a South Korean warship in March with the loss of 46 lives — a charge it denies.

Read the full story here:
US to target secret funds of N.Korea’s Kim
AFP
8/4/2010

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Posted in Banking, Finance, Fiscal & monetary policy, Tanchon Commercial Bank, USA | Comments Closed

DPRK overseas funds

Tuesday, August 3rd, 2010

According to KBS:

The Voice of America (VOA) says that, as of end of March, North Korea has a total of 67 million U.S. dollars in foreign banks in the name of individuals or groups.

Quoting a report from the Bank for International Settlements (BIS), the broadcaster said that the deposit stood at 106 million dollars at the end of last year, but plunged by 37 percent in just three months.

An official at the U.S. Congressional Research Service said that a substantial amount of the deposit is euro-denominated, and the drop over the three months might be a result of the euro’s depreciation.

The BIS report, released on July 10th, compiled quarterly reports presented by central banks of 43 nations.

Read the full story here:
VOA: NK Has $67Mln in Foreign Banks
KBS
8/3/2010

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Posted in Banking, Finance, Fiscal & monetary policy, International trade | 1 Comment »

DPRK issues rule on bank deposits

Thursday, July 29th, 2010

According to the Daily NK:

North Korean authorities released a public announcement that they will exchange deposits, consigned to the Chosun (North Korea) Central Bank during the currency redenomination in November last year, into new bills at the rate of 100:1 within the limit of 500,000 won.

Last November the North’s authorities announced that they will exchange the existing denomination, to a limit of 150,000 won per household, to the newly issued bills at the rate of 100:1. They urged people to deposit their remaining cash into the bank.

However, many citizens have refused to follow the instructions after previous experiences with forfeited deposits during the country’s fourth redenomination in 1992.

This measure is designed to work towards curing the hardships of residents caused by the decline in value of individual property since the last redenomination. There are hopes that it will stimulate market activity by increasing the amount of money in circulation, particularly since a downturn in purchasing power amongst the people led to an economic depression.

However, even after the Central Bank’s announcement the people remain apathetic. A source said that, “Prices have risen to similar levels as before the redenomination. Rice now costs over 1,000 won per kilogram; when you get back your deposit of 5,000 won you can only buy five kilograms of rice. It’s meaningless.”

If the state-designated price of rice, around 24 won per kilogram in procurement stores, had been maintained then this measure would be significant. Now the prices have multiplied by 50 and the people say that the measure is nothing but a play on words.

In addition, February saw the authorities hand down a decree to raise all state-designated prices by 100 times to levels known before the redenomination. The decree was not applied to people’s deposits in the bank, a fact that has received criticism from the public. A source commented that, “The authorities actions are nonsense. They raised prices by 100 times but people’s deposits were the same value as last year. It is ridiculous.”

Read the full sotry here:
Bank Deposits Can Be Withdrawn at 100:1 Rate
Daily NK
Park In Ho
7/29/2010

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Posted in Banking, Central Bank, Finance, Fiscal & monetary policy, Food, Price liberalization | Comments Closed

Luxembourg to track DPRK bank accounts

Thursday, July 29th, 2010

According to the Choson Ilbo:

Luxembourg has promised to cooperate with UN and U.S. financial sanctions against North Korea, Radio Free Asia reported Wednesday.

A spokesman for Luxembourg’s Finance Ministry told RFA that the country is closely watching for any illegal activities by the North using offshore accounts and will take “appropriate legal steps” if it finds them.

He claimed Luxembourg regularly updates domestic laws in accordance with international norms to monitor and punish those involved in illegal activities.

The country is committed to implementing sanctions against the North under UN Security Council Resolution 1874, he added.

In March, the Daily Telegraph said North Korean leader Kim Jong-il has a US$4 billion slush fund stashed away abroad in case he has to flee the North. Kim’s operatives “withdrew the money — in cash, in order not to leave a paper trail — and transferred it to banks in Luxembourg,” it said.

But at the time, the office of the grand duchy’s prime minister said it had no information about North Korean financial assets and there was no need to check. Although Luxembourg is a member of the EU, it is not easy to keep track of bank accounts there because it has a different bank payment and settlement system from other members.

On July 22, Hong Kong started a legal review of Taepung International Investment Group, a North Korean firm founded to attract foreign capital, and other North Korean companies.

Open Radio for North Korea on Wednesday quoted a North Korean source as saying the country’s former ambassador to Switzerland Ri Chol returned to the North in March to make sure Kim Jong-il’s secret accounts overseas are safely handed over to Kim Jong-un, his son and heir apparent.

Read the full story here:
Luxembourg to Help Track N.Korean Bank Accounts
Choson Ilbo
7/29/2010

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Posted in Banking, Finance, Fiscal & monetary policy, Hong Kong, Korea Taepung International Investment Group (Daepung Investment Group), Luxembourg, UN, UN Security Council, USA | Comments Closed

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