50,000 won banknotes debut today 

 

New 50,000 won banknotes, the largest denomination in Korea, go into circulation today amid both hopes and worries for the economy, as Korea makes an all-out effort to boost consumer spending while guarding against inflation.

 

Companies and financial firms have also been bracing for the circulation of the new bill, worth about $40.

 

Kookmin Bank, the nation's lender by asset, said it had been trying to supply its branches with enough 50,000 won bills to meet the demand from those wishing to get hold of the new notes on the first day of circulation.

 

It will allocate 100 million won worth of the bills to each of its more than 1,000 branches, Kookmin officials said.

 

Using the new banknotes with automatic teller machines will be a little inconvenient for the time being, because banks have been slow in upgrading or replacing existing machines to accept the new bills.

 

By the end of last week, Kookmin Bank has just 250 machines ready and most of them are installed at branches in Seoul and major cities. As for the other branches, the bank will wait until it sees how the new bills are received, officials said.

 

Shinhan Bank plans to have 1,330 machines upgraded or installed. Woori Bank said at least one machine at each of its some 800 branches will accept the 50,000 won bills by the end of next month.

 

Retailers are hopeful that the launch of the higher-value note will encourage consumers to spend more.

 

Korean consumers have tightened their budget as the economy contracted sharply under the impact of a global recession. Weak domestic demand, coupled with shrinking exports, has been a key concern for economic policymakers as they struggle to put the economy back on the path of growth.

 

"We hope the issuance of the 50,000 won bills will positively affect sales, as it will encourage customers to make bigger purchases in cash," said an official at Shinsegae Department Store.

 

In time with the debut today, Lotte Department Store put together a variety of items priced at 50,000 won.

 

Clerks at E-mart, the nation's largest supermarket chain run by Shinsegae Corp. underwent training sessions over the weekend intended to get them familiarized with the new banknote and ways to detect forgery.

 

Bank of Korea officials hope that the 50,000 won notes will help reduce social and economic costs of having only small-value bills that are not in synch with the economy.

 

It is the first time that higher-value notes have been issued since the issuance of the 10,000 won bill in 1973. Korea's per-capital income has grown 150 times and consumer prices 12 times since then.

 

"The issuance of the higher-value note is expected to help reduce the costs of issuing, storing and settling the 100,000-won bank checks," which are widely used daily, Lee Nae-hwang, a BOK official said.

 

Concerns also persist that the larger denomination would push prices up. Product prices which are just below 50,000 won could be raised to 50,000 won, retail industry officials agree.

 

Still, there will be no likely major impact on prices, the central bank insists.

 

Prices were not majorly impacted by the issuance of the 10,000 won notes in 1970, or when high-value notes were introduced in European countries in 2002, Lee said.

 

Source: The Korea Herald