The 50,000 Won Bill Disappearance Case... Only 30% Returns Even After Printing Money

Bank of Korea Report to National Assembly's Strategy and Finance Committee
31.4% Recovery Rate of 50,000 Won Notes from January to July... Less Than Half of Last Year

[Image source=Yonhap News]

[Asia Economy Reporter Eunbyeol Kim] # A recent visitor to a commercial bank's automated teller machine (ATM) was surprised to see a notice posted on the ATM. The notice stated that "all financial institutions are currently facing difficulties supplying 50,000-won bills" and "since the Bank of Korea has no plans to distribute additional high-denomination bills for the time being, we kindly ask for your understanding that the ATM will operate with 10,000-won bills instead of 50,000-won bills." As a result, the visitor had no choice but to withdraw funds in 10,000-won bills.

# Employees at commercial bank branches are also struggling with the shortage of 50,000-won bills. Recently, an employee at Bank A had to borrow 50,000-won bills from a nearby branch due to a shortage. The customer was a VIP at that branch and requested a withdrawal of 50,000-won bills, but the branch had run out of them. At Bank B, one branch has set a limit on the number of 50,000-won bills that can be withdrawn per person and is enforcing this limit during withdrawals.

Although an unprecedented amount of 50,000-won bills has been circulated, the return rate has dropped to about half compared to last year. This is due to a growing preference for cash amid the prolonged COVID-19 crisis, as well as an increase in high-net-worth individuals withdrawing 50,000-won bills to store in safes.

According to the Bank of Korea’s report to the National Assembly on the 24th, the issuance of 50,000-won bills from January to July this year amounted to 15.3 trillion won, an increase of about 1.3 trillion won compared to the same period last year (14 trillion won). However, the amount of 50,000-won bills returned to the Bank of Korea during the same period was 4.8 trillion won, sharply down to about half compared to last year’s 9.8 trillion won.

Therefore, the return rate of 50,000-won bills (amount returned relative to amount issued) was 31.4% from January to July this year, less than half of last year’s 70% for the same period. Although there are slight monthly variations, recently the monthly return rate of 50,000-won bills has even dropped to the mid-teens percentage range.

Despite the low return rate, the volume of 50,000-won bills remaining in circulation is steadily increasing. According to the Bank of Korea, as of the end of last month, the outstanding issuance balance of 50,000-won bills was 115.9 trillion won, up 10.5 trillion won (about 9.9%) from 105.4 trillion won at the end of last year. The outstanding issuance balance represents the amount of currency supplied to the market by the Bank of Korea minus the amount returned to the Bank’s vaults, indicating the volume remaining in circulation.

The outstanding issuance balance of 50,000-won bills surpassed 110 trillion won in January at 110.2 trillion won, then decreased to 108.9 trillion won in February, before rising again to 109.9 trillion won in March, 112.7 trillion won in April, and 113.9 trillion won in May, maintaining an upward trend.

In conclusion, even though new bills are being issued, 50,000-won bills are not returning to the Bank of Korea, and considering this situation, the Bank cannot simply print unlimited amounts of money. The Bank of Korea is currently discussing issuance volumes with the Korea Minting and Security Printing Corporation in preparation for the upcoming Chuseok holiday, which is just over a month away.

In its report, the Bank of Korea explained, "Due to the significant increase in demand for reserve currency centered on 50,000-won bills caused by the impact of COVID-19 and other factors, we will appropriately meet private sector demand through additional orders and other measures."

This content was produced with the assistance of AI translation services.