When South Korea printed currency for India (and other Asian countries)…

The industrial organisation of currency printing industry is indeed fascinating and full of conspiracy theory. So far the basic impression was that most of currency printing was done by Europeans.

Not really as South Korea too is part of the game.

Sojin Shin, a research fellow at the National University of Singapore has a fascinating piece in EPW on this:

Many Asian countries in the 1980s lacked sufficient currency. In most cases, the shortage stemmed from not only the lack of technology to establish mints but also the lack of capacity to produce sufficient high quality currency.

In the currency shortage crises, South Korea was the leader of exporting banknotes and coins to many countries in Asia. Considering that importing domestic currencies from foreign countries may involve financial security setbacks, South Korea exporting currencies at that time meant two more things beyond its obvious success in business. First, South Korea’s moneymaking technology was advanced enough to compete with other Western countries exporting currencies to Asia. Second, the bilateral relations between South Korea and the Asian countries that requested money production had to be based on trust.

There was a domestic currency shortage in the 1980s in India. The Government of India (GoI) needed to import coins to cater to the demand of the people. Three mints—Hyderabad, Bombay, and Calcutta—were producing coins at that time, but their capacity did not meet requirements. They produced 525 million coins in 1981–82, 650 million pieces in 1982–83, and 1 billion pieces in 1983–84. The GoI targeted to provide 2 billion coins in 1985. However, the capacity of the three mints was only around 1.3 billion pieces.

The lack of capacity to produce coins became the trigger for the Coinage (Amendment) Bill in 1985. Vishwanath Pratap Singh, the then Minister of Finance and Commerce proposed the Coinage (Amendment) Bill in Parliament to import coins from foreign countries (GoI 1985). Many of the members of Parliament (MPs) criticised the government’s inability to address the issue. They pointed out that the Reserve Bank of India (RBI) did not adequately lift coins from the mints. The shortage of coins meant that the weaker section of citizens using them more often encountered difficulties. The proposition made some MPs more upset over the agenda. Further, MPs were worried about financial security, as minting of coins in other countries may lead to currency smuggling.

Despite these concerns, the GoI decided to import coins from other nations to meet the target of securing 2 billion coins in 1985–86. Three foreign mints were asked to produce coins for India: Birmingham Mint in the United Kingdom, Korea Minting Security Printing and ID Card Operating Corporation (KOMSCO) in South Korea, and Royal Canadian Mint in Canada. Table 1 presents the number of coins imported from the three foreign countries to India during the period 1985–87 (GoI 1988). The total cost for the imported coins was around ₹300 crore at that time.

Hmm..

Likewise Koreans printed notes for Bangladesh (first contract) and then did tech transfer of currency printing to Bhutan as well.

In then end, we must remember “Made in Korea” notes are critical when it comes to diplomacy:

South Korea’s moneymaking technology was well known not only in South Asia but also in other Asian countries such as China, Philippines, Thailand, Indonesia, and Singapore. KOMSCO exported $72 thousand worth of 1 and 5 yuan coins to China from 1973 to 1982. For the Philippines, it supplied seven types of government stamps from 1972 to 1980. KOMSCO made a contract with the Thai government in 1985 to provide $720 thousand worth of banknote paper for 50 baht bills. It continued to export the banknote paper for 50 baht and 500 baht bills to Thailand until the early 1990s. In 1986, KOMSCO shipped 116 million pieces of three different types of coins—10, 20, and 50 cent—to Singapore.

South Korea’s exporting currencies to these countries at that time meant something beyond its success of business, because importing domestic currencies from foreign countries may involve financial security setbacks. It meant that not only was South Korea’s moneymaking technology of high standard, but it also meant that South Korea’s bilateral relations with various countries were based on trust. India, Bangladesh, Bhutan, and Pakistan were the countries in South Asia where “made-in-Korea” banknotes and coins were circulated. Further, South Korea’s moneymaking technology transfer to Bhutan was significant in a sense that possessing and producing unique national currencies is closely linked to national monetary strength.

Superb stuff.

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