Image of the local currency "Yesan Sarang Gift Certificate" issued by Yesan County. Provided by Chungnam Province.
[Asia Economy (Hongseong) Reporter Jeong Il-woong] Chungnam Province is analyzed to have generated an economic effect exceeding 3 trillion won through the issuance of local currency. The issuance of local currency also appears to have played a role in driving sales growth at affiliated stores despite the spread of the novel coronavirus infection (COVID-19).
According to the province on the 29th, the total amount of local currency issued in Chungnam last year was 730.586 billion won, which is 15.5 times the 47.3 billion won issued in 2019 and 2.2 times the initial target amount of 332.82 billion won.
By city and county, the scale of local currency issuance was highest in Cheonan at 178.551 billion won, followed by Buyeo at 78.499 billion won, Asan at 71.49 billion won, Seosan at 70 billion won, and Gongju at 58.412 billion won.
The amount of local currency sold reached 716.218 billion won, accounting for 98% of the total amount issued by the province. In particular, in the sales status by city and province, all issued amounts were sold in Cheonan, Asan, and Gongju, while Buyeo issued and sold an additional 3.474 billion won beyond the initial amount. The only place where sales were less than issuance was Seosan, where 69.118 billion won (98%) of the total issued amount was consumed.
The scale of local currency issuance and the sales rate exceeding 98% directly contributed not only to the original purpose of preventing the outflow of local funds but also to the sales increase effect for local small business owners, which had been depressed due to COVID-19.
First, the Chungnam Research Institute analyzes that local currency brought an economic effect of 3.0509 trillion won in the region. This figure includes a consumption promotion effect of 143.2 billion won, calculated by multiplying the local currency sales amount by additional purchasing power (20%), a reduction of 4.8 billion won in card fees for small business owners and self-employed individuals, local currency cash liquidity of 1.4468 trillion won, and a household income increase effect of 40.3 billion won.
The Chungnam Research Institute also reflected the effect of preventing local income outflow, including total sales of 716.2 billion won, production inducement effect of 473.3 billion won, and value-added inducement effect of 226.3 billion won.
The sales increase effect felt by local small business owners due to local currency issuance was also significant. According to a survey conducted by the Chungnam Research Institute in October last year targeting 602 local currency affiliated stores, about 550 stores, accounting for 92%, responded that there was a positive change in sales after joining as local currency affiliated stores.
Among the businesses that gave positive responses, wholesale and retail accounted for the largest proportion at 99.5%. Notably, all 30 store owners included in the survey answered that local currency influenced sales growth. The average monthly profit increase for all affiliated stores surveyed was also calculated to be 229,000 won.
Building on this momentum, the province has set this year's local currency issuance target at 1 trillion won. This is an increase of 269.414 billion won compared to last year's issuance amount. The province plans to not only increase the issuance amount of local currency but also expand affiliated stores closely related to daily life and emphasize the spread of easy payments using mobile devices.
Additionally, 46.3 billion won will be invested in local currency activation projects to support 10% discount sales and reimbursements (cashbacks).
A provincial official said, "Despite the spread of COVID-19 last year, local currency issuance is judged to have sufficiently achieved the original goals of preventing local income outflow and establishing a virtuous cycle in the local economy," adding, "The province will continue to make multifaceted efforts, including supporting activation project funds to expand local currency issuance, usage, and affiliated stores."
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