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N. Korea Issues Cash Coupons



North Korea has reportedly issued cash coupons, known locally as donpyo, with a face value of 5,000 North Korean won each. Phrases like the Central Bank of the Democratic People’s Republic of Korea and donpyo as well as the image of a triumphal arch in Pyongyang are printed on the front of the coupon. The monetary value is also indicated in the Korean language and 2021 is marked as the issue year. 

Here is Cho Han-bum, senior researcher at the Korea Institute for National Unification, to explain exactly what donpyo is. 

Donpyo, or the money coupon, performs the same function as cash. Originally, it was called “donypo exchanged for foreign currency.” In the past, it was difficult to circulate foreign currencies in isolated, closed regimes such as the Soviet Union and North Korea. In the North, people had to exchange foreign money for donpyo, which could be used at foreign currency shops. 

North Korea’s Central Bank issued “donpyo exchanged for foreign currency” for the first time in 1979. At the time, it was impossible to use foreign currencies directly. To purchase things, those who had foreign money had to exchange it for donpyo. From 1988, the Foreign Trade Bank began to print donpyo. 

In line with the spread of the private market or jangmadang and the wide use of U.S. dollars and Chinese yuan, private money changers emerged in North Korea and fewer and fewer people used the local money vouchers. After the economic reform measures on July 1, 2002, the donpyo system was abolished. 

The reduction in the use of donpyo had to do with the expansion of the jangmadang. As a major shift from the state rationing system, the jangmadang economy relied heavily on trade, leading to brisk circulation of foreign currencies. The July 1 economic reform measures actually promoted monetary circulation. Traders preferred dollars or yuan to the North Korean won, which was not considered competitive as a means of storing value. Foreign currency shops began to accept dollars, so people no longer had to exchange foreign money for donpyo, which gradually lost its function. 

North Koreans began to depend even more heavily on foreign currencies after the country’s currency reform in 2009. Under the drastic reform, local people were given seven days to exchange banknotes at a rate of 100 old to 1 new. The amount of one household could exchange was limited to just 100-thousand won, although the restriction was somewhat eased later. Any amount above that should be deposited at banks. After the currency reform, North Korean residents lost their trust in the local currency. 

After the 2009 currency reform in North Korea, dollars and yuan became increasingly important. Traders at the jangmadang found that the Central Bank could turn the North Korean won into a mere scrap of paper at any time. The currency reform had two purposes. First, the state wanted to intervene more aggressively in the black market of jangmadang. Second, the state took private capital by devaluing the local currency. It was impossible to exchange the amount above 100-thousand won, so the amount would be, in effect, worthless. People were shocked and angry at the extreme measure. Many market traders took their own lives. To soothe the fierce protests, the North Korean prime minister made a rare public apology. North Korea even publicly executed dozens of people including finance chief Pak Nam-gi to appease the angry public. Afterwards, people traded major goods directly with dollars or yuan, accelerating the so-called dollarization process. 

Following North Korea’s stricter ban on the use of foreign currency in markets last year, it has recently issued donpyo, which was scrapped in 2002. The latest money coupons do not include the phrase “exchanged for foreign currency” but simply indicate “donpyo.” Also, it was the Central Bank, again, not the Foreign Trade Bank, that printed the vouchers. 

This time around, the Central Bank issued the money coupons, as the Foreign Trade Bank is in charge of foreign exchange. North Korean authorities’ internal document confirmed that the country printed temporary money coupons in order to solve the problem of monetary circulation and the problem was triggered by the global health crisis. That is, the authorities say that they issued temporary coupons due to various difficulties stemming from the border shutdown. 

North Korean media outlets haven’t reported details about donpyo. About the purpose of the recent issuance of the money vouchers, interpretations vary. Some speculate that North Korea is attempting to secure foreign money held by local residents amid a prolonged shortage of foreign currency in the pandemic-induced border shutdown. Others believe that the North issued the money coupons to increase state finance. 

Many cite three major reasons. First, North Korea ran out of imported paper and ink so it is printing money vouchers with domestic products. Second, the country issued the coupons as a way of absorbing foreign currencies from the market. Third, the money coupons could serve the role of bonds. In general, a government bond is issued to finance government spending. There is no bond system in North Korea. So, by issuing temporary cash coupons, the North can generate the effect of smoothing monetary circulation without having to increase the total amount of money. The money coupons tear easily. North Korea encourages locals to use donpyo of poor quality, even urging them to accept torn coupons. 

However, North Korean citizens generally believe that foreign currencies are more stable than the won. It is questionable if the issuance of the cash coupons will prove useful for the local economy. 

I don’t think donpyo will be helpful at all. Even the Central Bank lost public trust due to the failed currency reform. Moreover, the authorities haven’t given proper explanations about the vouchers. Market traders are reluctant to accept donpyo. Many of them exchange the coupons at a rate of 3,000 or 4,000 won for each donpyo worth 5,000 won. The authorities repeatedly say that donpyo has the same value as cash and crack down on those who sell the coupons at cheaper prices. But considering that the temporary money coupons do not reflect the market value properly, they can’t be a solution. On the contrary, the coupons might throw the market into greater confusion.


The entire world is extremely nervous about the new COVID-19 variant, Omicron. North Korea also remains wary of the variant, reporting about how dangerous it is and how countries around the world are coping with it. Some analysts speculate that North Korea may strengthen its anti-virus measures even further and postpone the reopening of its border with China. If that happens, North Korea’s economic difficulties will only worsen. 

North Korea’s border closure is one of the factors that deteriorated the domestic economy. While the country is strengthening quarantine measures internally, some countries have reported Omicron cases. It is widely expected that North Korea would keep its border with China closed until the Beijing Winter Olympics. The unexpected outbreak of the Omicron variant is only making matters worse for the North Korean economy. The country is in a very difficult situation.

North Korea is considering a number of options to overcome its economic crisis, even printing temporary money coupons. Without a fundamental solution, however, it doesn’t seem easy for the country to tackle the economic difficulties. 

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