ABSTRACT
The monetary unification of the two alternative economic systems- Market Based Economy and Centrally Planned Economy- in Vietnam and Germany have shown lingering economic effects for several decades after their political unification in 1975 and 1990, respectively. During the initial decade after their unplanned sudden monetary unification, the people and unified government of the two countries experienced economic chaos, friction, and disruption with a trial-and error policy with no solid blue print. In this paper, after examining the process of monetary unification in the two countries, we address an important implication for the two Koreas on how to achieve a smooth monetary unification, without economic turmoil. Since South Korea is a major trading partner for North Korea, it would be a good idea for North Korea to adopt South Korean won as an anchor currency to determine its exchange rate against major currencies, and to expedite its economic growth with international trade.
Keywords
currency, optimization, unification