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If unification was going to happen I think maintaining two currencies until the two economies are on par would be most stable for noth Korean citizens. By stabi
by meric 12y ago
If unification was going to happen I think maintaining two currencies until the two economies are on par would be most stable for noth Korean citizens. By stabilising the NK currency through having it managed by the SK central bank while having the currency maintain a lower value than SK's, stability can be maintained while retaining labor competitiveness. All they need to do then is open the country to foreign investment and gradually open up the border. This way minimal public funds will be required and the private sector will help the economies unify over time in the most stable and efficient way.
- WildUtah 12y agoGermany just gave a huge gift to ever DDR citizen by trading the Mark and the DDR Mark at 1:1. With a per person limit of a few thousand marks, it wasn't that expensive and really set the unification up to succeed with popular backing.
- meric 12y agoThey could do the same by just sending some amount of south korean currency to every NK mailbox (or do it more throughly through records which I'm sure NK has kept on almost every household), while maintaining two currencies to allow NK export firms to have a competitive advantage in cheaper currency, rather than suffocating them for a period of time after unification (as you can read in the link), slowing the economic recovery. "East German currency was exchanged for West German deutsche marks at a rate of 1 to 1, although the market rate was 4 to 1, according to the FSC. The overestimated currency conversion helped stabilize the livelihoods of workers from East Germany in the short term, but soon resulted in a sudden wage hike, which damaged the profitability of East German companies."