Korea sees more circulation of 50,000 won notes amid economic vitality

South Korea is seeing a surge in the circulation of 50,000 won ($38.02) notes amid the high interest rate environment and increased post-pandemic economic activity.

According to the Bank of Korea on Sunday, the issuance of 50,000 won bills last year amounted to 21.1 trillion won and the amount of the bills returned to the central bank was 14.1 trillion won, resulting in a return rate of 67.1 percent, the highest since 67.4 percent in 2018.

The amount of 50,000 won bills returned to the central bank had plummeted to the 4~6 trillion won range in 2020 and 2021 due to the Covid-19 pandemic. From 60.1 percent in 2019, the return rate of 50,000 won bills plummeted to 24.2 percent in 2020 and 17.4 percent in 2021 before recovering to 56.5 percent in 2022. A high return rate means that the notes are actively circulating in the market.

The increase in the return rate of the 50,000 won bills is due to the recovery of face-to-face commerce, the normalization of the currency circulation route, and a decrease in the demand for currency that had increased for the purpose of storing value, the BOK estimated.

The recent increase in the opportunity cost of holding cash, due to the rise in market interest rates, is believed to be another contributor to the return of money that was net issued at a large scale during the pandemic.