North Korea Pushes for Electronic Payments to Tighten Market Control

North Korean authorities are actively promoting the use of electronic payments and have made revisions to financial regulations to curb cash transactions while encouraging cashless alternatives. This shift is seen as an effort to exert control over the marketization of the population, a notable contrast to South Korea, where electronic payments have gained popularity through organic technological advancements.

During a recent briefing on North Korean economic trends and developments, South Korea’s Ministry of Unification disclosed that North Korea is pursuing institutional changes to reduce cash circulation and promote electronic payments. In response to these objectives, North Korea enacted the Electronic Payment Law on October 29th, following the 8th Party Congress in January 2021. The law was subsequently amended on July 15th of the current year to address issues related to adopting electronic payments.

An official from the Ministry of Unification elaborated on North Korea’s economic control strategy, explaining that it aims to rein in the growing marketization of the population. As cash transactions in the marketplace increase, the amount of unregulated money in circulation also rises, prompting North Korean authorities to establish electronic payment regulations to curb this trend and encourage cashless transactions.

The official clarified that electronic payments in North Korea involve depositing funds into bank accounts and making transfers from these accounts or utilizing payment cards. The goal is to minimize the reliance on cash within the marketplace, thereby fostering greater cashless transaction adoption.

He further noted that residents tend to accumulate more cash holdings as North Korean markets become more active. However, due to a lack of trust in banks within the socialist economic system, many individuals refrain from depositing their money. Consequently, concerns over increased currency volumes and the accompanying challenges of maintaining control have prompted North Korean authorities to implement measures to regulate and reduce cash usage.

North Korea has introduced legal reforms across its economic sector to counteract the marketization of society. In addition to the Electronic Payment Law, the regime enacted usury regulations on February 2nd to enhance supervision over usurious businesses and prevent ideological relaxation within the financial sector. Furthermore, they have taken steps to monopolize grain sales and distribution, implemented revisions to the socialist commercial law, and emphasized state-owned commercial networks over the complete supply system.

South Korea’s Ministry of Unification emphasized that following the breakdown of the second North Korean summit in Hanoi in 2019, Kim Jong Un emphasized self-reliance and convened the 8th Party Congress in January 2021. In line with the five-year economic development plan established during the congress, the North Korean authorities have reinforced their management and direction of the economic system.