South Korea dumps coins with little notice|
June 16, 2017
It isn’t a cashless society – yet – but South Korea took a quick and decisive step in that direction April 19 when on almost no notice the Bank of Korea announced consumers can now accept their change from cash purchases onto debit cards at specific stores.
It doesn’t appear that there is much sympathy out there for South Korea’s coinage. The British Broadcasting Corporation described the central bank’s actions, reporting:
“South Korea is starting a trial which could result in banishing its largely worthless coins from the country’s economy.
“The online reporting entity Engadget said, ‘Coins are a pain in more ways than one. You probably don’t like fishing for change, of course, but they’re also expensive to make (the US loses money on every penny) and require mining that hurts the environment. Wouldn’t it be good to get rid of coins altogether? South Korea is trying just that.’
“The South Korean news reporting service Yonhap said, ‘South Korea plans to launch a pilot project for a coinless society this week, South Korea’s central bank said Wednesday, a move that could enhance convenience for ordinary people.”
A recent BOK survey indicated that nearly two-thirds of those surveyed no longer carry coins, while about half support the concept of a coinless society.
There are mixed signals regarding what will happen next. On April 19 the BBC identified Cha Hyeon-jin as being one of several officials behind the move and that “while no long-term decisions have been made, there’s a ‘good chance’ that going coinless could eventually lead to a totally cashless society in South Korea at some stage in the future.”
Engadget disagreed, reporting: “Officials don’t necessarily see this leading to a cashless society. They’re open to the idea, but the short-term concerns revolve around convenience as well as the government’s own costs.”
The pocket change conversion to debit card concept is still a “pilot project” and was at the time this article was being written only available at the CU convenience store chain, 7-Eleven, E-Mart discount store outlets, Lotte Mart and Lotte Department Stores. Should the trial be a success, the service will be offered nationwide.
Behind the coinless society idea is the cost of doing business. A 10-won coin has an exchange value of less than one cent US. South Korea’s highest denomination coin, the 500 won, has an exchange rate of about 44 cents. South Korea’s lowest denomination bank note is the 1,000 won, which has a value of about 89 cents US. The BOK reported spending 53.7 million won or about $47 million US striking coins during 2016.
South Korea currently issues 10-, 50-, 100- and 500-won coins and 1,000-, 5,000-, 10,000- and 50,000-won bank notes. Older bank notes dating as far back as 1962 are still redeemable, according to the MRI Bankers’ Guide to Foreign Currency.
The purchasing power of Korea’s coins has always been modest. Korea has never had a circulating specie coinage. Iron-composition coins were issued by the Goryeo dynasty during the 10th to 14th centuries, those coins circulating alongside grain, linen and imported cash coins from neighboring China. Copper composition coins followed during the subsequent Joseon dynasty, but so did Jeohwa mulberry bark paper money that often replaced coins.
Circulating coinage had more success during the 17th century, when 24 mints operated throughout Korea. The yang decimal coinage that began in 1892 failed to circulate significantly. The Bank of Korea was founded in 1909, but Korea was conquered soon after by Japan. The Korean War that quickly followed World War II created to the two Koreas that exist today. South Korea converted its hwan currency to the won in 1962 at an exchange rate of 10 hwan to the won.
North Korea’s coins have not performed any better. The north has nine denominations ranging from 1 chon to 100 won. A 100-won coin (aluminum composition) has an official exchange rate of 11 cents.
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