Even This Year, the Hidden 50,000-Won Bills... Recovery Rate from January to May at 17.6%, Record Low Level

[Image source=Yonhap News]

Last year's annual recovery rate was 24%, lower than the 33.32% recovery rate from January to May last year

In the COVID-19 era, self-employed people's bank deposits decrease while asset owners keep cash

[Asia Economy Reporter Kim Eunbyeol] Since last year, the phenomenon of 50,000 won bills disappearing as soon as they are printed has continued due to the ongoing COVID-19 crisis. The recovery rate of 50,000 won bills that circulated in the market and returned to the Bank of Korea's vault by May this year has dropped to an all-time low. As people avoid face-to-face transactions during the COVID-19 pandemic, cash usage has decreased, but the tendency to hold cash as a precaution against crises has increased, leading to a significant rise in demand for high-denomination bills. Fortunately, the Bank of Korea had increased its order volume, so there is no shortage of 50,000 won bills in circulation like last year, but the phenomenon of bills disappearing as soon as they are printed continues.

According to the Bank of Korea on the 8th, the amount of 50,000 won bills that circulated in the market and returned to the Bank of Korea's vault from January to May this year was 1.6947 trillion won. Considering that the issuance amount during the same period was 9.6251 trillion won, the recovery rate is only 17.61%. This means that out of every 10 bills of 50,000 won issued, less than 2 bills have returned to the Bank of Korea. This is half the recovery rate of 33.32% during the same period last year and, except for the first year of issuance in 2009 (7.32%), it is the lowest ever. There is also a possibility that this year's recovery rate will fall below last year's annual recovery rate of around 24%.

The disappearance of 50,000 won bills is a phenomenon caused by a combination of factors arising from the COVID-19 crisis. Before COVID-19, when people spent money in industries such as lodging and food services, self-employed people in those sectors often deposited the money they earned in cash into banks, but recently, their earnings have significantly decreased.

Another reason for the increased demand for 50,000 won bills is that under the ultra-low interest rate environment, people tend to keep funds in high-denomination bills rather than bank deposits. When interest rates are high, people deposit 50,000 won bills in banks expecting interest income, but when interest rates are low, the demand to simply hold cash increases.

Many asset owners also keep cash separately to avoid taxation. Whenever they have surplus funds, they withdraw money from banks and store it in safes. It is also known that parents sometimes withdraw money in 50,000 won bills monthly to give cash to their children to avoid gift tax. Accordingly, sales of personal safes for home use surged in the first half of this year. According to Shinsegae Department Store and Hyundai Department Store, the sales growth rate of personal safes in the first half of this year exceeded 50%.

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