'Dollarization' of North Korean Economy, Once Vital, Now Potential Threat to Kim's Rule
SEOUL, South Korea (AP) Before fleeing North Korea in 2014, Jeon Jae-hyun kept U.S. dollars as a store of value and used Chinese yuan to make everyday purchases at markets, restaurants and other places. He used the domestic currency, the won, only occasionally.
There were not many places to use the won, and we actually had little faith in our currency, Jeon said during a recent interview in Seoul. Even the quality of North Korean bills was awful as they often ripped when we put them in our pockets.
North Korea has tolerated the widespread use of more stable foreign currencies like U.S. dollars and Chinese yuan since a bungled revaluation of the won in 2009 triggered runaway inflation and public unrest.
The so-called dollarization helped ease inflation and stabilize exchange rates, enabling leader Kim Jong Un to establish a stable hold on power after he inherited that role in late 2011. But the trend poses a potential threat to Kim as it has undermined his governments control over money supply and monetary policies.