S. Korea eyes redenomination

S. Korea eyes redenomination

Agence France-Presse, Seoul

South Korea's central bank is pushing for a 1,000-for-one currency redenomination to take place in the next three to five years, news reports and officials said on Tuesday.

The Bank of Korea has already worked out a detailed plan on changing the face value of a current 1,000 won (about 90 U.S. cents) note into one won, said the Chosun Ilbo, the largest- circulation daily in South Korea.

Officials at the bank confirmed that they had worked out details on the proposed currency reform but refused to elaborate.

"The Bank of Korea has completed its two-year study about currency redenomination on which the government and the parliamentary should decide," Jeong Nam Seok, head of the currency issue policy team, said.

Later the central bank issued a statement saying it was inappropriate to talk about implementation of the matter at this stage.

"It's an issue subject to a mid- to long-term study. It's inappropriate to discuss whether to implement it or not for now as there are lots of policy tasks that take priority."

The currency redenomination would reflect the economic growth of South Korea, now the world's 12th largest trading nation, and reduce the costs of issuing high-denomination notes and checks.

South Korea and Turkey are the only two Organization for Economic Cooperation and Development members with a four-digit exchange rate with the U.S. dollar.

The central bank is also considering changing the currency name after the redenomination and reducing the size of notes and coins, Chosun Ilbo said.

The bank has already ordered new minting machines in preparation for the printing of the new money from September next year, if necessary, the newspaper said.

The bank, in talks with the government to carry out the currency redenomination, plans to hold public hearings to promote the issue, it said.

The bank will eventually revise relevant laws and implement the currency reform after three to five years of preparation.

The won currently trades around 1,145 against the dollar.

Yonhap news agency said the currency reform would cost an estimated 250 billion won (US$218 million).

South Korea went through two major currency reforms in the past, a 100-for-one currency redenomination in 1953 after the war with North Korea and a 10-for-one currency swap in 1962.