Bank of Korea to issue higher-denomination bills in 2009SEOUL, May 2 (Yonhap) -- South Korea's central bank said Wednesday it plans to issue two higher-denomination banknotes in 2009 as the values of current bills fail to match the scale of the economy.
The Bank of Korea plans to issue 100,000-won (US$107.40) and 50,000-won bills in the first half of 2009. Currently, 10,000 won is the highest denomination of the country's currency in circulation, followed by 5,000 won and 1,000 won.
"As the highest denomination is too low compared with the economy such as income and prices of goods, it is generating huge economic costs and inconveniences," BOK Gov. Lee Seong-tae said in a statement. Since 1973, when the circulation of 10,000-won bills began, commodity prices have grown twelvefold and the gross national income has become 150 times larger.
Amid a lack of larger denominations, reliance on bank checks resulted in tremendous costs for issuing and handling them. It also triggered a problem of dishonored or fake checks, of which 76,537 were found last year.
The use of the new bank notes will also cut the costs for circulation of bank checks and 10,000-won bills. With the higher bills replacing bank checks, the central bank will likely earn 170 billion won a year from issuing them.
Upon approval by the government and a subsequent resolution by the bank's Monetary Policy Committee, the central bank will issue the bank notes on the same day.
However, the central bank has no plan to push for redenomination of the currency in the near future, Lee added.
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