Won is a cognate of the Chinese yuan and Japanese yen, which were both derived from the Spanish-American silver dollar.

It is derived from the hanja 圓 (원, won), meaning "round", which describes the shape of the silver dollar.

The Korean won, Chinese yuan and Japanese yen were all derived from the Spanish-American silver dollar, a coin widely used for international trade between Asia and the Americas from the 16th to 19th centuries.

[4] The disagreements between the Japanese and Russian Empires led to the Russo-Japanese War when Japan attacked Port Arthur in Russian Dalian and Incheon in Korea, the war ended in a Japanese victory, Japan occupied the Kwantung Leased Territory and the Korean peninsula.

[3] In 1905 the Japan Mint began to produce the Korean won's new coinage, this entirely new series was modeled almost exactly on the patterns of contemporary Japanese coins and even used the same planchets.

During this era Korean cash coins were still largely circulating in the regions of southern and north-eastern Korea.

[4] The withdrawal of copper-alloy Korean cash coins was made easier due to a global rise in the price of copper, during this era thousands of pounds of copper-alloy Korean cash coins were exported at a profit.

[4] In the year 1908, Korea was hit by a panic when the value of nickel dropped significantly, this led to the Korean public quickly exchanging their cupronickel at the banks.

[9] In the year 1909 there were supposedly 4,000,000 of 5 jeon nickel coins that were struck at the Japan Mint, however, most were melted down due to their demonetised status.

[3] The coins all carried the title of the "state", Daehan (대한; 大韓),[3] and the Korean era name, Gwangmu (광무; 光武) and then Yunghui (융희; 隆熙), whilst the specifications were equivalent to the coins of the Japanese yen.

However, Korean yen notes were issued by Dai-Ichi Ginko (First National Bank (of Japan), 주식회사제일은행, 株式會社第一銀行).

[4] Both local banks and quasi-governmental firms had tried to establish a paper money system in Korea during this era, but none of their issues seemed to have been readily accepted by the public.

[4] The Dai-Ichi Bank had petitioned the imperial Japanese government to be granted permission to issue banknotes in Korea, to augment the demonetised Japanese yen coins that it was importing, this was because in the year 1885 the imperial government had monopolised the issuing of banknotes and prohibited banks from doing this in Japan.

[4] The fractional banknotes issued by the Dai-Ichi Bank were seen as being very convenient, and were soon circulating all over the Korean peninsula.

[3] Furthermore China's weakened position during this era allowed for the interests of the Russian Empire in the Far East to expand significantly as well.