Bok Officially Begins Campaign To Rid The Coin

Even taking out the cash coins, the "modern coin" in Korea began with the Japanese introducing their coin minting process. If you don't consider that, then the true first Korean-made modern coins came in 1959 with the 10, 50, and 100 Hwan coins. If you aren't counting the Hwan and only considering the second Won, then yes you're correct.

And you are very correct in stating that there aren't enough variety of coins. You are also correct about the comparison. Korean coin collected is nowhere near the US.

The first domestically-minted South Korean made coins were NOT the hwan coins, but the 1966 won coins.

See my webpages on South Korean coins: http://dokdo-research.com/hwancoins.html

I stand corrected then. :)

I think my point was that the collection history, or coins to be collected, in Korea goes way back. Thanks to all for the information.

I was showing a friend my collection this weekend and we got on this subject of coins going away and I am still unsure what will happen. We will have to see in 2020 when they go away.

Only 2.2% of Korea's banknotes and coins by value is coins while 80.3% is the largest denomination banknote, and 95% is in the top two denomination banknotes.

The KRW50,000 banknotes (worth less than $50) has only been circulating since 2009 because widespread fear of N Korean counterfeiting has meant that S Korea was reluctant to issue large denomination banknotes. But having no banknote larger than KRW10,000 (less than $10) meant that foreigners would face getting stacks of bills from an ATM.

If you look at circulation per inhabitant in S Korea, you realize that the true objective of the elimination is to eliminate all small banknotes as well.

Number per inhabitant of banknotes and coins (% of cash)
 33.7	KRW 50,000 banknote	80.3%
 30.8	KRW 10,000 banknote	14.7%
  5.4	KRW 5000 banknote	 1.3%
 30.7	KRW 1000 banknote	 1.5%
 47.0	KRW 500 coin	1.12%
186.6	KRW 100 coin	0.89%
 38.9	KRW 50 coin	0.09%
155.5	KRW 10 coin	0.07%

Cash per individual in South Korea is still about triple that of Sweden using straight currency conversion (not accounting for the lower cost of living in Korea).

Eliminating coins will for the most part eliminate any need to pay with the smaller banknotes. It would be silly to pay for something with KRW 1000 bill (less than $1) and receive your change on a card.

Once the coins and small banknotes are no longer in widespread usage, the government can go after the larger notes very quickly in case of a counterfeiting scare. In the 1940s in Britain there was a massive counterfeiting scare when it was uncovered that the Nazi's had an elaborate counterfeiting operation using captured Jewish calligraphers.

Britain recalled all £5 notes and replaced them with ones incorporating metal threads in less than 15 months. Then they demonetized all notes except the £1 note and the new £5 notes with the metal thread (worth about US$20 at the time). That way the money supply was relatively safe from counterfeits.

If South Korea detects large numbers of North Korean counterfeits, the routine transactions will already be carried out electronically. They can order all the large notes be turned into banks for Counterfeit Detection and to be deposited into bank accounts, or their value added to electronic cards or phone apps.

Switzerland twice printed an entire reserve banknote supply just in case counterfeiting became a problem. They no longer do that as they now have so many anti-counterfeiting devices in their banknotes that it is virtually impossible to make an undetectable copy.

But South Korea is circulating 100 banknotes and over 400 coins per individual, while Sweden is circulating only 20 banknotes and about 60 coins per individual. In the extreme event of having to replace the entire banknote supply, obviously it would be much easier to have considerably smaller numbers.

There is so much paranoia about government invasion of privacy, but I still think it is simply a matter of efficiency.

You have so many small banknotes and coins that are basically recording ciphers at great expense, it's only natural to want to reduce costs.

1 SEK = 122 KRW, 1 AUD = 819 KRW

South Korea banknotes and coins in Won
50,000	80.3%
10,000	14.7%
 5,000	 1.3%
 1,000	 1.5%
------------------
   500 	 1.12%
   100	 0.89%
    50	 0.09%
    10	 0.07%

Sweden banknotes and coins in krona
1000	 5.9%
500	70.6%
200	 9.2%
100	 5.4%
50	 1.6%
20	 1.8%
------------------
10	 3.85%
5	 0.82%
2	 0.51%
1	 0.31%

Australian banknotes and coins in AUD
AUD 100	42.2%
AUD 50	45.5%
AUD 20	4.4%
AUD 10	1.7%
AUD 5	1.3%
------------------
AUD 2.00	2.09%
AUD 1.00	1.16%
AUD 0.50	0.61%
AUD 0.20	0.47%
AUD 0.10	0.29%
AUD 0.05	0.27%

The standard currency reform (illustrated by AUD) is to
(1)turn the smallest banknote(s) into a coin(s), and
(2)eliminate the very smallest value coin(s).

Sweden has reduced circulation of it's largest denomination banknote as a currency reform.

Korea is simply getting rid of all coins, which will also eliminate the need for most of the small banknotes. Although the T-money cards are restricted to a maximum of about US$430, it is quite possible that many people will be nervous about losing them or having them stolen. I think it will be much more common to store $50-$100 on each card, but either way the smallest three denominations of banknotes will be used a lot less.

In Sweden the central bank website prominently displays the following statement:

The Riksbank does not govern how much cash is in circulation in society. This is instead determined by demand from the general public.
Riksbanken styr inte över hur mycket kontanter som används I samhället utan det styrs av allmänhetens efterfrågan.

Instead of the words "govern" and "determine" which are English words of Latin origin, Swedish uses the verb "styr" which is related to the English verb "steer". The sentence in Swedish implies that the central bank is not "steering the changes in circulating cash".

I would be interested in the opinions of someone from South Korea on this issue. It seems like the Bank of Korea is very much "steering the boat" with regards to cash in circulation.

I am also curious how much money people typically keep on their T-mobile cards. If it is 100,000KRW ~ US$86 that gives me an idea how useful it is in replacing cash for purchases.

Banknotes are technically a "promise", but the preferred term is that they are "sovereign money" and are a liability to the central bank. They differ from "commercial bank money" which exists purely in electronic form and is backed by loans made by the commercial banks.

Back in 1725 the Bank of England issued its first banknotes in denomination £20 and £50, which was a huge amount of money at the time. Normal transactional money was coins of copper, silver, and gold and banknotes were more like IOUs that made it easier to travel or to hide money on your person.

Today 1 million Won ~ US$860 and the South Korean government circulates a little over 2 million Won per inhabitant in the form of 100 banknotes and over 400 coins per inhabitant. Perhaps in five years normal transactional money will be electronic, and banknotes will be closer to what they were in 1725 (relatively large amounts of value). Today nearly 80% of the value of S Korean cash is in the 50,000 KRW denomination.

Personally, I can forsee a the Korean government demonetizing the 1000, 5000, and 10000 KRW banknotes right after the coins are demonetized. The T-Money cards can be loaded with up to 500,000 Won, so they are perfectly adequate to replace the three small denominations of banknotes as well as coins.

There are only 1.7 billion banknotes of 50,000KRW denomination in circulation for a population of just over 50 million. In the event of a counterfeiting scare they can be replaced in a reasonable amount of time. Replacing the full count of banknotes in circulation (5.2 billion) would be much harder.