As the third project in our series on understanding Kim Jong Un’s economic policymaking, we examined how North Korean academic journals treat the concept of banking. We did so, in part, because of the surprisingly large number of articles touching on the banking issue in recent years. That intense focus suggested that new policies on banks—signaled by Kim Jong Un’s letter to a banking conference in December 2015—had presented the regime with a complicated challenge, engendering considerable research and discussion.
Indeed, that turned out to be the case. The deeper we got into over 40 journal articles, not only in Kyo’ngje Yo’ngu and the Journal of Kim Il Sung University (Hakpo) but also Sahoe Kwahagwo’n Hakpo (the Journal of the Academy of Social Sciences), the more threads there were to pull, the more angles to understand, and the more links to be followed. It also seemed worth noting that, although the banking issue was a focus in the journals, it was—and still is—almost completely absent from the two major central media sources targeting the general domestic public—Rodong Sinmun and Minju Joson.
In many ways, it appears that the issue of banks was more complex than the defense versus civilian spending conundrum we discussed in the second installment of this series. As sensitive as the regime considered the defense spending issue, the banking problem was perhaps even more so. The enlargement and reform of the banking sector, which is what the regime has been attempting under Kim Jong Un, seems to have forced Pyongyang to deal with a number of new, thorny questions about how, practically and realistically, to push the economy to grow. In the process, explicitly or not, the regime had to justify adopting measures that, only a few years ago, were roundly condemned as capitalism in its worst forms. Charging interest for loans became one approved way banks could earn funds for operating capital; credit cards became portrayed as a way to increase money circulation and to ease the burden on consumers of traveling to the bank.
There is an assumption sometimes expressed by outside observers that the North’s efforts in the banking sector have been primarily aimed at increasing control over funds accrued outside of central control. To the contrary, the bulk of the articles in the journals we studied focused on the opposite: how to increase “creativity” in banks, lessen rigid control from the center, and make space for bank officials—and the sector as a whole—to respond to conditions and developments at the local and enterprise levels without undue restrictions.
You can read the full analysis on 38 North.
Understanding Kim Jong Un’s Policymaking: Pyongyang’s Views on Banking
By Robert Carlin • Rachel Minyoung Lee
Korean Peninsula
This article was originally published on 38 North.
As the third project in our series on understanding Kim Jong Un’s economic policymaking, we examined how North Korean academic journals treat the concept of banking.1This paper is the third installment of the “Understanding Kim Jong Un’s Economic Policymaking” series made possible through generous support from the Korea Foundation and the Luce Foundation. This paper uses a modified version of the McCune-Reischauer romanization system for North Korean text, with some proper nouns following internationally recognized spellings or North Korean transliterations instead. For an overview of the project and the project’s scope and methodology, see https://www.38north.org/2021/05/understanding-kim-jong-uns-economic-policymaking-project-overview/. On the evolution of North Korea’s defense spending policy, see https://www.38north.org/2021/09/understanding-kim-jong-uns-economic-policymaking-defense-versus-civilian-spending/. We did so, in part, because of the surprisingly large number of articles touching on the banking issue in recent years. That intense focus suggested that new policies on banks—signaled by Kim Jong Un’s letter to a banking conference in December 2015—had presented the regime with a complicated challenge, engendering considerable research and discussion.
Indeed, that turned out to be the case. The deeper we got into over 40 journal articles, not only in Kyo’ngje Yo’ngu and the Journal of Kim Il Sung University (Hakpo) but also Sahoe Kwahagwo’n Hakpo (the Journal of the Academy of Social Sciences), the more threads there were to pull, the more angles to understand, and the more links to be followed. It also seemed worth noting that, although the banking issue was a focus in the journals, it was—and still is—almost completely absent from the two major central media sources targeting the general domestic public—Rodong Sinmun and Minju Joson.2For that contrast in coverage, we still don’t have an explanation. It might reflect the sensitivity of the banking issue; it might also be explained by the fact that as changes to banking policies are under internal discussion, the issue is not yet deemed appropriate for either the party or government dailies.
In many ways, it appears that the issue of banks was more complex than the defense versus civilian spending conundrum we discussed in the second installment of this series. As sensitive as the regime considered the defense spending issue, the banking problem was perhaps even more so. The enlargement and reform of the banking sector, which is what the regime has been attempting under Kim Jong Un, seems to have forced Pyongyang to deal with a number of new, thorny questions about how, practically and realistically, to push the economy to grow. In the process, explicitly or not, the regime had to justify adopting measures that, only a few years ago, were roundly condemned as capitalism in its worst forms. Charging interest for loans became one approved way banks could earn funds for operating capital; credit cards became portrayed as a way to increase money circulation and to ease the burden on consumers of traveling to the bank.3Forms of electronic money, including credit cards, were extensively and at least implicitly explored favorably in Hakpo articles as early as 2013. See Ri So’n, “Understanding Electronic Financial Services and the Direction of Their Development,” Kim Il Sung Chonghaptaehakhakpo (Ch’o’rhak, Kyo’ngje) 2, (2013); and Ryu Ch’o’n, “Types of Electronic Money,” Kim Il Sung Chonghaptaehakhakpo (Ch’o’rhak, Kyo’ngje) 3, (2013). For the issue of loan and savings interest, see Nam So’k-ch’un, “Composition of Commercial Banks’ Funds in a Socialist Society and Their Characteristics,” Kyo’ngje Yo’ngu 2, (April 2019).
There is an assumption sometimes expressed by outside observers that the North’s efforts in the banking sector have been primarily aimed at increasing control over funds accrued outside of central control. To the contrary, the bulk of the articles in the journals we studied focused on the opposite: how to increase “creativity” in banks, lessen rigid control from the center, and make space for bank officials—and the sector as a whole—to respond to conditions and developments at the local and enterprise levels without undue restrictions.
You can read the full analysis on 38 North.
Notes
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