The won is the official currency of South Korea. It can be subdivided into 100 jeon, the decimal subunit of the won, although the jeon is not now used in private or consumer transactions. The name for South Korea’s currency has the same origin as the Japanese yen and Chinese yuan: They are all local translations meaning round object or round shape. This terminology for currency derived from the Spanish coins that were often used for international trade in East Asia.
Korea has used a proprietary currency system, off and on, for thousands of years, but their currency was not always known as the won. The won was not officially introduced until 1902, replacing the yang. In 1910, the won was eliminated when Japan annexed Korea as a colony. The Korean yen replaced the won until a divided Korea gained independence from the Japanese at the end of World War II. The won was reintroduced as northern won and southern won, both at a one-to-one exchange rate with the old Korean yen. South Korean won were pegged to the U.S. dollar, after reintroduction, at a rate of 15 won: 1 USD. However, a series of devaluations took place beginning in 1947 that left the won’s value at 900 times less than what it was in 1945. Finally, in 1953 the won was abandoned for a new monetary unit, the hwan, which would endure until the end of the Korean War.
When the won was reintroduced in 1962, it was known as the second won. It was introduced at a rate of 1 won: 10 hwan. For international exchange purposes, the second won was pegged to the U.S. dollar at 125 KRW: 1 USD. The hwan was not officially withdrawn from circulation until 1975. In 1980, South Korea began efforts to remove the peg and float the won, but success in floating the won was not achieved until 1997. Shortly after being floated, the East Asian financial crises began, causing the won to lose almost half of its value in a very short period.
The Bank of Korea continues to remain the sole monetary and economic authority in South Korea and all coins and currency are printed internally by the Korea Minting and Security Printing Corporation. Coins in circulation are in denominations of 1, 5, 10, 50, 100 and 500 won, but most transactions are rounded to the nearest 10 won. Banknotes are printed in denominations of 1,000; 5,000; 10,000; and 50,000 won.