Move over Won

It seems that in South Korea some banks are engaging in product innovation to help customers ward off some of the effects of inflation. Rather than denominating bank accounts using the Won (national currency) some banks are now offering accounts denominated in gold. Whilst it is obvious that people will move their wealth to avoid the effects of inflation I am still intrigued by the novelty of this particular initiative (a throw back to the days of free banking). It seems that other banks are also intrigued with suggestions that the practice is set to expand. Of course the effect inflation has on moneys wealth storing effect is avoidable in many ways and this is in any case somewhat secondary to the broader economic maladies that inflation creates.

4 thoughts on “Move over Won

  1. To me, it’s a surprise it hasn’t happened sooner, seeing as gold prices have risen by over 15% in 5 of the last 6 years, and has averaged 18.6% annually over that time period. Sure puts the 4% I get from Westpac to shame!

  2. Gold prices have also fallen in the past. In US dollar terms the late 1990s is notable. Gold is a good inflation hedge but it cuts both ways.

  3. These have been around for ages. I seem remember that my HSBC account in HK I had some years ago allowed me to buy gold without me actually having to ask for this facility (you have to ask for all the other commodities I believe). What suprises me is how few options Australian accounts allow. I have a Commonwealth account plus comesec, and I can’t even buy other currencies or stocks from from other countries without filling a pile of forms and paying some ridiculous premium. Its not clear to me whether this is just the banks being sloppy, or whether they are forced to by the government. If all these things were essentially free or very cheap (how much can they possibly cost the bank?), I imagine lots of people would use them.

  4. US dollar accounts are available from Australian banks as are US denominate loans. However I don’t know how hard they are to open. Of course the US dollar is not generally a refuge against inflation.

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