Korean finance and monetary policy chiefs wave off redenomination talk

Hong Nam-ki, deputy prime minister for economy and finance minister.

Korea’s top economic policymaker agreed with the central bank governor in waving off political call for redenomination to better reflect Korea’s economic scale and jump-start the stubbornly slow-motion economy.

“This is absolutely no time to study redenomination when the government is going all-out to stimulate the economy,” said deputy prime minister and finance minister Hong Nam-ki.

He added a major and important work of changing the nominal value of the Korean won demands a lengthy study and buildup of social consensus, given the massive repercussions across the society.

On Thursday, Bank of Korea Governor Lee Ju-yeol also flatly denied the possibility for now or in the future. “The urgent work is to focus resources to revive the economy and improve productivity,” he said.

Bank of Korea’s Gov. Lee Ju-yeol

The talk of knocking out some zeroes in Korean money has repeatedly come up in past years as the won is the tiniest currency among members of the Organization of Economic Cooperation and Development (OECD) with a four-digit exchange rate against the dollar.

Markets were stirred by a recent announcement that some lawmakers of the ruling party are campaigning to start discussions on redenomination. The news briefly led stocks related to automated teller machine (ATM) to rally on expectations of possible currency reform.

Supporters of redenomination have argued that the face value of the Korean won should be lowered to more manageable number to reduce calculating complications. They also say that it would result in increasing tax revenues by bringing out the underground black money. Opponents, however, argue that it would do more harm than good because it would create serious inflation and require tremendous amount of social and economic costs.

On Friday, the Korean won remained unchanged at 1,136.9 against the U.S. dollar.

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