Central Bank of the Democratic People's Republic of Korea

The Central Bank of the Democratic People's Republic of Korea is the central bank of North Korea. Its principal responsibilities include issuing and managing the North Korean won, administering monetary and credit functions, supporting the government's economic plans, and supervising or coordinating parts of the country's highly state-directed banking system. The bank is subordinate to the Cabinet of North Korea rather than operating as an autonomous central bank in the conventional market-economy sense. The institution emerged from the restructuring of banking arrangements in the northern part of the Korean Peninsula after the end of Japanese colonial rule. A temporary monetary office was created in Pyongyang in December 1945 from the local branch of the Bank of Chōsen. A central bank for North Korea was established on 9 January 1946, initially under Soviet military influence, and a separate Farmers' Bank was created in April of that year. The early arrangement proved difficult to sustain financially and institutionally. In October 1946, the banking system was reorganized: 58 local banks and the North Korean operations of several Japanese-era Korean banks were consolidated into the central bank, while control shifted from the Soviet authorities to the North Korean government through its finance ministry. A comprehensive currency-reform program was announced on 6 December 1947, the date generally associated with the formal establishment of the present institution. During the early years of the Democratic People's Republic of Korea, the Central Bank and Farmers' Bank formed the core of a Soviet-influenced single-tier banking system. Banking resources were concentrated in the central institution so that it could extend credit for economic rehabilitation and state development priorities. In 1959, the Farmers' Bank was merged into the Central Bank. The Foreign Trade Bank was established in the same year to handle international business previously conducted through the central institution, contributing to a gradual division between domestic central-banking functions and specialized foreign-trade finance. Additional state institutions dealing with foreign-exchange operations appeared from 1987 to 1996. For much of North Korea's modern history, the Central Bank also performed functions that in other systems would normally belong to commercial banks. It maintained an extensive branch network, collected and allocated funds, provided credit within the planned economy, and supported state payments. Financial and banking changes associated with the period after Kim Jong Un came to power separated central-bank responsibilities from some commercial-banking activities, although the wider financial system remains under strong state control and is difficult to assess from publicly available information. The bank has more than 220 branches and operates the Chŏnsŏng electronic cash card. Its physical headquarters was demolished in 2011 to make way for redevelopment connected with the Mansudae and Changjon Street area projects, commemorating the centenary of Kim Il Sung's birth. A replacement Central Bank building was established in the Ot'an-dong area of Chung-guyok in Pyongyang. Since 2023, the bank's president has been Paek Min Gwang. Public information about its balance sheet, reserves, monetary instruments, internal governance, and day-to-day operations is limited.

The Central Bank of the Democratic People's Republic of Korea developed from the postwar reconstruction of banking institutions in northern Korea. In December 1945, the Pyongyang branch of the Bank of Chōsen established a temporary monetary office known as the calculation office. On 9 January 1946, a central bank for North Korea was created using the branches of the Bank of Chōsen located in the northern territory. The institution initially operated under the influence of the Soviet Armed Forces. A Farmers' Bank was added in April 1946 to support agricultural finance and related state objectives. The original arrangement did not meet the financial and administrative needs of the emerging North Korean government. The central bank was unable to cover its operating costs, and its initial capitalization of 100 million won was considered inadequate. The North Korean Interim People's Committee consequently relied heavily on the Farmers' Bank while it reconsidered the structure of the banking system. A major reorganization took place on 29 October 1946. Fifty-eight local banks were merged into the central institution, including North Korean operations belonging to Japanese-era Korean banks headquartered in Seoul, such as Chōsen Commercial Bank, Chōsen Savings Bank, and Chōsen Trust. At the same time, authority over the central bank moved from Soviet control to the North Korean government through its finance ministry. The consolidation enabled the government to bring banking resources under tighter administrative direction and to align credit allocation with economic rehabilitation plans. By 1947, the Central Bank and Farmers' Bank were the country's two principal credit institutions. Together they formed a single-tier structure modeled on the Soviet system, in which the central institution combined monetary, banking, and substantial commercial functions. In June of that year, approximately 1 billion won was concentrated in the Central Bank, allowing it to provide about 900 million won in credit for economic rehabilitation. Employees who opposed the restructuring were removed from their positions. On 6 December 1947, the government announced a comprehensive currency-reform program, a date commonly treated as the formal establishment of the Central Bank of the Democratic People's Republic of Korea. The bank remained central to the development of North Korea's planned economy. In 1959, the Farmers' Bank was merged into it, further concentrating domestic banking responsibilities. The Foreign Trade Bank was created in the same year to manage international financial business that had previously been handled through the Central Bank. Later, between 1987 and 1996, additional state banks were created for foreign-exchange operations and other specialized purposes. These changes gradually divided some functions among separate institutions, although the Central Bank retained its role as the country's monetary authority. Before financial reforms associated with the period after Kim Jong Un assumed power, the Central Bank also acted as North Korea's de facto commercial bank. Subsequent banking changes separated some commercial activities from central-bank functions. The bank nevertheless continues to operate within a system dominated by government ownership, planning, and administrative controls. It has more than 220 branches and operates the Chŏnsŏng electronic cash card. In 2011, the Central Bank's Pyongyang building was demolished during redevelopment of the Mansudae and Changjon Street area, projects associated with preparations for the centenary of Kim Il Sung's birth. A replacement site was established in the Ot'an-dong division of Chung-guyok. Publicly available information about the bank's monetary policy, financial condition, reserves, and internal structure remains limited. Paek Min Gwang has served as president since 2023.

• 2023

  Paek Min Gwang identified as president

  [1]Central Bank of the Democratic People's Republic of Koreaen.wikipedia.org

  Paek Min Gwang has served as president of the Central Bank since 2023.

• 2011

  Headquarters relocated during Pyongyang redevelopment

  [1]Central Bank of the Democratic People's Republic of Koreaen.wikipedia.org

  The former headquarters was demolished for the Mansudae and Changjon Street redevelopment, and a new Central Bank site was established in Ot'an-dong, Chung-guyok.

• 1959

  Farmers' Bank merged into the Central Bank

  [1]Central Bank of the Democratic People's Republic of Koreaen.wikipedia.org

  The Farmers' Bank was absorbed into the Central Bank, while the Foreign Trade Bank was established to handle international financial business.

• 1947

  Currency-reform program announced

  [1]Central Bank of the Democratic People's Republic of Koreaen.wikipedia.org

  A comprehensive currency-reform program was announced on 6 December, the date commonly associated with the formal establishment of the present central bank.

• 1946

  North Korean central bank established

  [1]Central Bank of the Democratic People's Republic of Koreaen.wikipedia.org

  A central bank for North Korea was created on 9 January using the northern branches of the Bank of Chōsen.

• 1946

  Farmers' Bank created

  [1]Central Bank of the Democratic People's Republic of Koreaen.wikipedia.org

  A Farmers' Bank was established in April to complement the early central-banking arrangement.

• 1946

  Banking system reorganized

  [1]Central Bank of the Democratic People's Republic of Koreaen.wikipedia.org

  On 29 October, 58 local banks and North Korean operations of several Japanese-era banks were consolidated into the Central Bank, with authority transferred to the North Korean government.

• 1945

  Creation of a temporary monetary office

  [1]Central Bank of the Democratic People's Republic of Koreaen.wikipedia.org

  The Pyongyang branch of the Bank of Chōsen created a temporary calculation office as an early post-liberation monetary institution.

State monetary authority and central institution of North Korea's government-directed banking system

• Currency and monetary services · 1947

  North Korean won issuance

  The Central Bank issues the North Korean won and administers core functions associated with the country's official currency. In North Korea's state-directed economy, currency management is closely connected to government economic planning and financial administration. Public information on the bank's specific operational instruments and reserve-management practices is limited.

• Central banking · 1947

  Domestic banking and credit administration

  The bank allocates and administers credit within North Korea's state-controlled banking system. Historically, it combined central-bank and commercial-bank functions, supporting state enterprises and economic-rehabilitation programs through a single-tier structure. Later reforms separated some commercial activities from central-bank responsibilities, but the institution remains central to domestic financial administration.

• Electronic payments

  Chŏnsŏng electronic cash card

  The Chŏnsŏng electronic cash card is an electronic payment product operated by the Central Bank. Publicly available sources identify the card and its connection to the bank but provide limited detail about its technical design, distribution, transaction volume, and user base.

• 2011

  Replacement of the Pyongyang headquartersOther

  Background

  The Central Bank headquarters stood in an area selected for major redevelopment associated with the Mansudae and Changjon Street projects.

  Action taken

  The existing building was demolished and a new Central Bank site was established in the Ot'an-dong division of Chung-guyok.

  Aftermath

  The bank continued operating from a redeveloped Pyongyang location connected with preparations for the centenary of Kim Il Sung's birth.

  Source

• 1959

  Merger of the Farmers' Bank and creation of a foreign-trade banking divisionStrategy

  Background

  The state sought to concentrate domestic banking functions while creating a more specialized institutional channel for international financial activity.

  Action taken

  The Farmers' Bank was merged into the Central Bank, and the Foreign Trade Bank was established to handle international business previously conducted through the Central Bank.

  Aftermath

  Domestic banking became more concentrated under the Central Bank, while foreign-trade finance began to develop as a distinct state-banking function.

  Source

• 1946

  Consolidation of North Korean banking institutionsStrategy

  Background

  The early post-liberation banking arrangement was financially weak and divided among a central bank, a Farmers' Bank, and numerous local or legacy institutions.

  Action taken

  The North Korean government consolidated 58 local banks and the northern operations of several Japanese-era banks into the Central Bank and transferred effective control from Soviet authorities to the government through its finance ministry.

  Aftermath

  The consolidation strengthened state control and established the basis for a single-tier banking system modeled on the Soviet approach.

  Source

1. 1Central Bank of the Democratic People's Republic of Koreaen.wikipedia.org