The Return of Sinsa Imdang, 50,000 Won Bill Recovery Rate Highest in 5 Years

by Lee Changhwan

Published 14 Jan.2024 12:00(KST)

Updated 14 Jan.2024 12:06(KST)

Asia Economy DB

The Bank of Korea announced on the 14th that the recovery rate of the 50,000 won bill reached 67.1% last year.

This is the highest level since the 67.4% recorded in 2018.

The normalization of currency recovery channels due to the recovery of face-to-face commerce after COVID-19 and the decrease in demand for reserve currency caused by rising interest rates influenced this result.

The amount of 50,000 won bills recovered, which had decreased to around 4 to 6 trillion won from 2020 to 2021 due to the spread of COVID-19, increased to 14.1 trillion won in 2023.

Currency circulation, which had been contracted due to restrictions on face-to-face commerce during the COVID-19 period, began to expand from 2022 when social distancing measures were eased.

The Bank of Korea estimated that currency circulation is normalizing mainly in industries traditionally having a high proportion of cash sales, such as food and accommodation, transportation, and leisure services.

Source: Bank of Korea

It was also affected by the decrease in demand for currency for reserve and value storage purposes due to rising interest rates.

With the recent increase in market interest rates, the opportunity cost of holding cash has risen, leading to a reduction in demand for currency for reserve and value storage purposes, and the large-scale net issuance of funds during the COVID-19 period has been recovered.

The Bank of Korea explained that the recovery rate of high-denomination bills in major countries, including the United States, also increased due to rising interest rates and other factors after the COVID-19 pandemic.

A Bank of Korea official forecasted, "In the future, the recovery rate of the 50,000 won bill will be influenced in the short term by the direction of market interest rates, while in the long term, factors such as the spread of non-cash payment methods and an increase in damaged bills due to the circulation lifespan of the 50,000 won bill will act as upward factors."