Counterfeit Chinese yuan bills are spreading fast in North Korea, flooding local marketplaces and causing headaches for traders and merchants who have no way to get the fakes out of circulation, sources in the country said this week.
The fake bills have been changing hands at local markets near the border with China in recent weeks, posing problems for North Koreans who are barred from using the foreign currency in the first place.
Despite being illegal, the Chinese yuan is widely accepted alongside North Korea’s unstable won both in official marketplaces and on the black market in the isolated country, which has a thriving cross-border trade with China.
In the northwestern city of Sinuiju, across the border from China’s Dandong city, one resident said the fake bills have become so common that traders like him have begun to take precautions when accepting payments in yuan.
“Since fake Chinese yuan bills are widespread, when someone pays with a high-denomination bill, I take down the bill’s serial number and the signature of the person paying in case the bills turn out to be forged,” he told RFA’s Korean Service, speaking on condition of anonymity.
He said the extra steps annoy people making purchases but are necessary to ensure he can recoup any losses from fake bills.
Another man in Sinuiju who conducts trade with Dandong said he has started taking similar measures.
“I copy down all the 100 yuan bills I receive from North Korean traders and then ask the messenger to sign,” he said, speaking on condition of anonymity.
"If there were only a few fake bills, I wouldn't have to do this anymore," he said.
'Fake bill nations'
In the northeast, one resident in Yanggang province said fake 100-yuan notes are circulating there as well.
Speaking on condition of anonymity, he said he had heard the notes had entered the country “via Chinese drug smugglers,” while other rumors going around suggested that the bills had been spread by South Korea as a strategic ploy to undermine the North’s economy.
Counterfeit currency is not new to North Korea’s marketplaces—which have earned the local nickname of “fake bill nations”—but sources said that recently the notes have been spreading fast and complained there is no way to get them out of circulation.
North Korea, which has in the past been accused by the U.S. of running its own counterfeiting operation, has no government bureau to collect phony currency.
Whereas in other countries banks detect counterfeit currency in cash that is deposited with them, North Koreans do not deposit Chinese currency in the bank, leaving the fake notes in circulation.
Those who realize they have received fake Chinese yuan bills are passing them off to others pretending they do not notice the fakes, the sources said.
In the mid-2000s, the U.S. accused the North Korean government of conducting one of the most sophisticated counterfeiting operations in the world by using a multimillion-dollar printing press to print U.S. $100 bills that were nearly indistinguishable from real ones.
North Korea rejected the claims.
Reported by Joon Ho Kim for RFA's Korean Service. Translated by Goeun Yu. Written in English by Rachel Vandenbrink.