North Korean currency reform of 2009 was a currency exchange that sharply restricted how much old money individuals could convert, erasing a substantial share of private wealth. The book presents the measure not simply as a response to inflation but as a political intervention: it targeted people using markets and expropriated savings in a country where the state controlled the banks.

The Exchange and Its Limits

In November 2009, the government announced that one hundred old wons would equal one new won. The basic arrangement resembled France’s 1960 currency reform, which also removed two zeros from the currency. The crucial difference was the deadline: people in North Korea had just one week to exchange their old notes, rather than the forty-two years allowed in the French case.

The Wealth Lost

The exchange was subject to a strict ceiling. Individuals could initially convert no more than 100,000 won, a sum worth about $40 at the black-market exchange rate. The government later raised the limit to 500,000 won, but the restriction still wiped out a huge fraction of citizens’ private wealth. The exact amount is unknown; the book estimates that the loss was probably greater than the wealth expropriated by the Argentine government in 2002.

The impact extended beyond money held by market traders. North Korea had few banks, all owned by the government, so people also kept savings in wons. By limiting conversion, the state could seize much of those savings as well as cash accumulated through market transactions.

Political Purpose and Significance

The government opposed private property and markets, but it was difficult to control black markets, where transactions were conducted in cash. Some involved foreign currency, especially Chinese currency, yet many relied on won. The reform was designed to punish people who used these markets and, more specifically, to prevent them from becoming wealthy or powerful enough to threaten the regime. Keeping them poor was safer for those in power.

The episode illustrates the gap between a policy’s monetary appearance and its distributional purpose. The reform changed the unit of account, but its short exchange window and conversion cap transferred wealth from ordinary citizens to the state and constrained the independent economic power of market participants.