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Experiences of Transition and Integration in the Financial System: Implications for North Korea (in Korean)

Author

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  • Timothy Cogley

    (Department of Economics, Seoul National University)

Abstract

This study reviews the experiences of transition and integration in the financial sector in the three East European countries, that is, Hungary, Czech Republic, and East Germany. In more detail, it analyzes the following experiences: the establishment of two-tier banking system, privatization of commercial banks and the management of non-performing loans, and the reform of exchange rate regime. The implications for North Korean transition and integration are drawn as follows. North Korea should replace a mono-banking system with a two-tier one by dividing the Chosun Central Bank into two parts: the function of a central bank and that of a commercial bank. Following this division, the part of commercial bank should be privatized using the method of sale to outsiders. The problem of non-performing loans needs to be addressed properly with a sufficient amount of financial resources. It is advised to establish an exchange rate regime that provides a long-term economic stability and competitiveness. For this purpose, a fixed exchange rate regime followed by a floating one should be considered as a default option.

Suggested Citation

  • Timothy Cogley, 2014. "Experiences of Transition and Integration in the Financial System: Implications for North Korea (in Korean)," Working Papers 2014-32, Economic Research Institute, Bank of Korea.
    • Handle: RePEc:bok:wpaper:1432
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    More about this item

    Keywords

    North Korean Economy; Financial Reform; Financial Integration;
    All these keywords.

    JEL classification:

    • P34 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Finance
    • P41 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Planning, Coordination, and Reform
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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