Demand for gold and 50,000 won banknotes is soaring after the Park Geun-hye government’s vow to tax the underground economy, data showed on Thursday.
According to Yonhap News, which compiled data from the Bank of Korea and some financial institutions, the amount of 50,000 won banknotes in circulation as of April reached 35.52 trillion won ($31.83 billion).
During the first four months of this year alone, the amount increased by 3.76 trillion won. It is almost double the increase from the same period last year of 1.92 trillion won.
The 50,000 won notes began circulation in June 2009.
The report also said the 50,000 won note ratio to the total currency issuance increased from 49.2 percent in 2011 to 65.9 percent this year.
Meanwhile, the demand for gold, which has been popular among some of the rich as a wealth-hiding method, is reportedly increasing.
Some banks have started carrying gold in their branches as there are increasing demands from private banking customers. A KB Kookmin Bank official was quoted by Yonhap News as saying his branch sells 200 kilograms of gold per month on average.
Other bank officials said consulting on gold purchase is increasing after the government started to bring to light the shadow economy.
Banks’ gold sales are made in a legitimate manner as value-added tax is imposed on deals. But gold market officials said it is presumed that about 60 to 70 percent of trading in the 5 trillion won domestic gold market has been made in unconventional ways to avoid taxation.
By Chung Joo-won (
joowonc@heraldcorp.com)
