Steve H. Hanke of Johns Hopkins University recently wrote about North Korea and hyperinflation. Though he titled the article “North Korea: From Hyperinflation to Dollarization,” he could have titled it “North Korea: From Hyperinflation to Yuan-ization.” As Hanke points out, there are some solid reasons for yuan-ization. North Korean markets along the Chinese border now conduct approximately 80% of their transactions in Chinese yuan and China accounts for more than half of North Korea’s foreign trade and the lion’s share of its foreign direct investment.
North Korea stands to benefit from such a policy. “Yuan-ization would put an end to North Korea’s inflation woes, at least creating the potential for domestic economic growth. It would also facilitate increased trade with China and perhaps other countries, as well.”
To read the report click here.