South Korean banks are scrambling to secure more 50,000-won notes ($44), saying only a limited amount of the highest denomination paper money is available due to its low return rate.

According to the Bank of Korea in April, total return for 50,000-won bills in the first quarter of this year was 3.37 trillion won. The rate of refund is 58.6 percent, about 30 percent lower than the previous quarter.

Industry watchers speculate the recent plunge in the refund rate is largely due to the new government’s strong drive to shrink the size of South Korea’s underground economy.

“Since the National Tax Service announced the expansion of investigations into the underground economy, the wealthy withdrew a bundle of 50,000-won bills and kept them in private locations,” said Lee Hye-hoon, a supreme council member of the ruling Saenuri Party.

“The sales of private safes increased by 20 percent compared to last year, which is believed to have a strong link to the recent shortage of 50,000-won bills in the market,” she emphasized.

The BOK, however, downplayed the possible connection between the shortage of 50,000-won notes and the underground economy.

“The demand of 50,000-won bills can fluctuate from seasonal factors,” said an official from the central bank. “The refund rate (of the 50,000-won bill) is also increasing year by year, from 7.3 percent in 2009 to 61.7 percent in 2012.”

Since it was first issued in 2009, some 35.5 trillion won worth of 50,000-won bills are currently in circulation. It features the portrait of Shin Saimdang, a historical figure of the Joseon Dynasty.



By Park Sui, Intern reporter
(suipark@heraldcorp.com)