Koreans Hoard high-denomination Banknotes
01 December, 2020
Koreans are actually hoarding high-denomination banknotes under their mattress for a down economy ahead.
Simply 25.4 percent of W50,000 bills, the best denomination, were retrieved during the first 10 months of the year, the lowest given that they first went into circulation in '09 2009. The retrieval fee reached as much as 60.1 percent in 2019.
The primary reason is that cash payments are on the way out, and that's compounded by the coronavirus epidemic.
Okay, Ji-hoon at the Bank of Korea said, "During the Asian financial meltdown, the manufacturing and building industries were hit hard, but through the COVID-19 crisis, the hospitality and provider industries suffered a sharp decline in face-to-face transactions. These sectors typically have large volumes of cash transactions."
A BOK review in 2018 showed that cash accounted for 18.6 percent of the hospitality industry's transactions, in comparison to just 2.2 percent in making and 0.9 percent in construction.
But the second purpose is that persons are hoarding cash. From January to October, around W22 trillion value of W50,000 notes were released but simply W5.6 trillion worth were paid into banks (US$1=W1,108).
The BOK said that the retrieval rate for the W50,000 notes is low in comparison to high-value bills far away because not that lots of these are in circulation yet. It added there happen to be no fears that the amount of money provides somehow disappeared into underground slush funds.
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