Central Bank of the Democratic People's Republic of Korea Explained

The Central Bank of the Democratic People's Republic of Korea, also known as the Central Bank of North Korea, is the country's central bank.

It's responsible for managing the country's currency, the North Korean won.

The Central Bank of North Korea was established in 1947, shortly after the country gained independence.

Its main office is located in Pyongyang, the capital city of North Korea.

The Central Bank of the Democratic People's Republic of Korea has a complex and fascinating history.

In December 1945, the Pyongyang branch of the Bank of Chōsen created a temporary monetary office, known as the "calculation office".

This marked the beginning of a new era for the Central Bank, which would eventually become the central bank of North Korea. On 9 January 1946, the central bank of North Korea was created with use of all branches of the Bank of Chōsen on North Korean territory.

The Soviet Armed Forces controlled the central bank in practice, but it struggled to meet its costs of operation and had a 100 million wŏn capitalisation that proved to be insufficient. In April 1946, a Farmers' Bank was created to complement the central bank.

However, the Soviet-controlled central bank failed to accomplish its objectives, so the North Korean Interim People's Committee opted to work mainly through the Farmers' Bank. On 29 October 1946, the system was reorganized, with 58 local banks merging into the central bank.

This included North Korean operations of Japanese-era Korean banks headquartered in Seoul. Simultaneously, control of the central bank was taken over from the Soviet forces by the North Korean government through its finance ministry.

By 1947, the Central Bank and Farmers' Bank were the only two credit institutions in the country and together formed its single-tier banking system in line with the Soviet model. In June 1947, around 1,000 million wŏn was concentrated in the Central Bank.

This allowed it to extend credits totalling 900 million wŏn for economic rehabilitation, reflecting a return to the original objectives of the People's Committee. Any bank employees opposed to the changes within the system were removed from their posts.

On 6 December 1947, a comprehensive program of currency reform was announced. In 1959, the Farmers' Bank was merged into the Central Bank of the Democratic People's Republic of Korea.

The Foreign Trade Bank was established to handle the Central Bank's international business. Further state banks to deal with foreign exchange operations were created between 1987 and 1996.

In 2011, the Central Bank building was torn down to make way for the newly constructed Mansudae/Changjon Street Area in celebration of Kim Il Sung's 100th birthday anniversary.

The Central Bank of the Democratic People's Republic of Korea is the sole bank of issue and receives all national revenues and precious metals.

It provides government agencies with working capital and supervises several other state banks, including the Foreign Trade Bank, which handles all foreign transactions and currencies.

The Central Bank has strict control over currency and markets, and in 2009, it revalued the won to 1 percent of its existing value, effectively eliminating virtually all savings individuals had accumulated.

This drastic measure caused an economic crisis and prompted rare public protests by citizens.

The government also maintains control over banking, allowing limited joint-venture banking in the late 1980s and later permitting private and corporate savings accounts for nonresidents.