On Nov. 30, North Korea redenominated its currency, the won, without prior announcements, and reportedly banned the use and circulation of foreign currencies after Jan. 1.
The direction of this decision seems opposite that of the "economic reform" carried out by Pyongyang in July 2002. At that time, prices and wages were raised several dozen times from earlier levels; some private markets, including farmers' markets, were allowed; and enterprises with self-supporting accounting systems came into being.
According to North Korean central bank authorities, 100 old won are now worth 1 new won, and old bills will become worthless unless exchanged for new ones. Old bills saved in government-run banks are to be exchanged at the rate of 10 old won to 1 new won. Price levels will drop to the levels prevailing before the 2002 reform.