Korea’s Reunification and Financial Policy Tasks 2: Current Status of NK’s Economy


North Korea’s GDP is around 34 trillion won, an equivalent to that of South Korea in 1971 and 1/5 of our size of GDP as of last year.


Economic gap between the two Koreas is huge compared to the German case. Disparity in per capita GDP between South and North stands at staggering 20 folds which is more than 9 times wider compared to the gap between West and East Germany.


North Korea’s financial system is underdeveloped, saying that it has mono-banking system, state-controlled monetary system, supply-oriented financial system, and no cash transaction. Central Bank of the DPRK, North’s central bank and the only functioning commercial bank at the same time is the sole source of money supply. Its only monetary policy means is controlling the size of bank loans. Moreover, the foreign exchange is directly controlled by the regime due to which the gap between official and commercial rate is widening. Although North Korea has been making laws and taking measures to improve its financial system and economy, the disparity between financial laws and economic realities is worsening.




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