Banknotes, Not Used but Stored Due to COVID-19... Last Year's Banknote Recovery Rate Hits Record Low

Published 17 Feb.2021 07:27(KST)

[Image source=Yonhap News]

[Asia Economy Reporter Kim Eunbyeol] Last year, the overall currency return rate across all banknotes dropped to the lowest level since statistics began being compiled. This is analyzed to be due to people using cash less amid the spread of COVID-19 and holding onto high-denomination bills because of uncertainty.

According to the Bank of Korea on the 17th, the return rate for all denominations last year was 40.0%, the lowest figure since the Bank started compiling related statistics in 1992. The return rate is the ratio of the amount returned to the Bank of Korea compared to the amount issued during a specific period.

During the 1997 foreign exchange crisis and the 2008 financial crisis, the return rate remained around 100%, but it was notably low during the COVID-19 crisis. The return rate was maintained close to 100% at 100.7% during the foreign exchange crisis and 95.4% during the financial crisis.

A Bank of Korea official explained, "Last year, there was high demand for cash, especially high-denomination bills such as the 50,000 won note," adding, "In the process of responding to COVID-19, a low-interest-rate environment unfolded, which likely influenced the decision to simply hold onto currency."

He further elaborated, "In particular, the main channel for currency returns is face-to-face service industries based on self-employment, but last year, due to COVID-19, face-to-face contact drastically decreased, resulting in a lower return rate compared to other crises."

The return rate for the 50,000 won note last year was 24.2%, the lowest since its first issuance in 2009 (7.3%). Following the 50,000 won note, the demand for the next largest denomination, the 10,000 won note, also increased, leading to a record low return rate of 74.4% last year.