Central Bank of the Democratic People's Republic of Korea

Central Bank of the Democratic People's Republic of Korea is the primary monetary authority and sole issuer of currency for North Korea. It was established in the early years of the Democratic People's Republic of Korea following the dissolution of the Bank of Chosen. Operating under the guidance of the Workers' Party of Korea and the State Affairs Commission, the bank plays a central role in the nation's Juche-based economic system, managing monetary policy, foreign exchange, and the state treasury.

History

The bank was founded on December 6, 1947, by the Provisional People's Committee for North Korea, replacing the colonial-era Bank of Chosen which had operated during the Japanese rule in Korea. Following the establishment of the Democratic People's Republic of Korea in 1948 under Kim Il-sung, the bank was formally constituted as the state's central monetary institution. Its early operations were heavily influenced by the economic models of the Soviet Union and involved the post-Korean War reconstruction of the national financial system. Throughout the late 20th century, its role evolved in response to the country's economic plans, the collapse of the Eastern Bloc, and the severe North Korean famine of the 1990s.

Functions and responsibilities

The bank's primary function is to issue the national currency, the North Korean won. It is responsible for formulating and implementing monetary policy in alignment with the economic directives of the Cabinet of North Korea and the State Planning Commission. Key duties include managing the state's gold and foreign exchange reserves, regulating credit to state-owned enterprises, and overseeing the limited domestic banking sector, which includes the Foreign Trade Bank of the Democratic People's Republic of Korea. It also acts as the government's fiscal agent, handling treasury operations and financing for state projects.

Organization and structure

The bank is headquartered in the Sungri Street area of central Pyongyang. It is led by a Governor, currently Kim Chon-gyun, who is appointed by the Supreme People's Assembly. The organizational structure includes numerous provincial branches and local offices throughout the country's regions, such as North Hamgyong Province and South Pyongan Province. The bank operates under the ultimate authority of the State Affairs Commission and coordinates closely with other financial institutions like the Korea Daesong Bank and the Korea Kwangson Banking Corporation. Internal governance is structured through a board and various departments managing note issuance, credit, and international settlement.

Monetary policy and currency

Monetary policy is subordinated to the state's economic planning goals, with a focus on funding industrial output and government expenditures rather than traditional inflation targeting. The bank maintains strict control over the North Korean won, which has undergone several revaluations, most notably in 2009. The currency exists alongside limited markets for U.S. dollars, yuan, and euros. The bank also produces special certificates for use by foreign visitors and operates in an environment with a complex system of official versus market exchange rates, often involving entities like the Bureau 39.

International relations and sanctions

The bank's international operations are severely constrained by comprehensive multilateral sanctions regimes led by the United Nations Security Council, the United States Department of the Treasury, and the European Union. These measures, enacted in response to the country's nuclear weapons program, target the bank and its affiliated financial institutions, prohibiting transactions and freezing assets. The bank and entities like the Foreign Trade Bank of the Democratic People's Republic of Korea have been implicated in circumventing sanctions, leading to designations by the Office of Foreign Assets Control. This isolation limits formal ties with global bodies like the International Monetary Fund and restricts correspondent banking relationships worldwide.

Category:Central banks Category:Economy of North Korea Category:Government agencies of North Korea Category:Banks established in 1947