On September 17, Won Hee Ryong,the governor of Jeju, expressed his opinion about local currency regards to the report released by the “Korea Institute of Public Finance (KIPF)” on his Facebook page. The governor said, “It is the desire that KIPF ro suggest directions to improve the limits on current local currency. Jeju Island is researching blockchain technology as an alternative to the fix limitations of the local currency.”
He continued, “With paper version of gift certificates, the problems raised by KIPF can still occur. We are considering a point bank that is linked with local currency. According to a step-by-step plan, gift certificates will be converted into points to create a local currency roadmap that can be used in various ways within the region.”
On September 14, KIPF released a report titled “The impact of the introduction of local currency to the local economy”. In the report, KIPF concluded that “local currency does not have a significant impact on revitalizing the local economy or protecting small businesses in the region.”
Regarding vitalizing the local economy, he said, “It is not very effective because local currency is issued in all neighboring regions.” KIPF said, “There is a short-term effect that local currency may block consuming outside of the regions but it may cost contracting the economy in neighboring localities. If all local governments issue local currency, only side effects such as the issuance cost and wasted budget due to subsidies will remain.”
Regarding the effect of protecting small business owners in the region, the local currency can only be used at affiliated stores operated by small business owners in the region, so it has been evaluated that some hypermarket sales are transferred to small business owners. The report mentioned, “However, you can use the ‘Onnuri Gift Certificates’ operated for similar purposes. Onnuri gift certificates can be used nationwide, which has no side effects like local currency.”
KIPF suggested, “It is good to consider that the central government helps to issue local currency at a specific time and in a specific region.” For example, in regions with a high proportion of face-to-face service industries such as tourism, the central government can support subsidies for issuing local currency as the national treasury because the damage caused by Corona-19 is greater than in other regions.
The report said, “Even in this case, since the use of local currency is limited to some industries, it is necessary to take a supplement to the problem of concentrating benefits, and to consider the advantages of using local currency compared to Onnuri gift certificates of similar nature.” In addition, he added that because issuance of local currency can distort various market functions, it is possible to consider a direct support method for businesses rather than indirect support through local currency.
The governor said on Facebook, “In Jeju, we have prepared a new Jeju regional currency policy after long deliberation with various experts and residents. We will make it with a policy.”
번역: 김동우 기자
