From the Second Currency Reform in 1953 to Third Currency Reform in 1962
The Bank of Korea undertook the Third Currency Reform in 1953 in an effort to lessen the economic turmoil caused by the Korean War. The Bank mandated the acceptance of its banknotes as the sole legal tender to ensure the identity of Korean currency and strived for continued development of the Korean currency system.
The Korean War paralyzed production activities, and huge military expenditures led to severe inflation. To lessen these economic turmoil, the Currency Reform was carried out on February 15, 1953, on a 100-won to one hwan basis. The Bank of Korea then prohibited the circulation of won-denominated Bank of Korea notes. It also halted circulation of the Bank of Joseon notes in seven denominations (10-, 5-, 1-won and 50-, 20-, 10- and 5-jeon notes) and that of the Japanese government's subsidiary money (1-jeon coins), which had circulated alongside Bank of Korea notes, and designated the hwan-denominated Bank of Korea notes as the only legal tender, ensuring the integral unity of the Korean currency. The money issued under the Currency Reform in 1953 consisted only of banknotes, namely 1,000-, 100-, 10-, 5- and 1-hwan notes. New banknotes in different designs and colors were then issued several times until the Third Currency Reform in 1962. Meanwhile, as the economic hardships caused by the Korean War had been overcome to some degree, prices had stabilized and industrial activities had returned to normal, the Bank of Korea issued its first coins in three denominations ― 100-, 50- and 10-hwan coins ― in 1959 in order to improve the currency system, reduce its currency production expenses, and provide convenience in small value transactions.