Bank of Korea Not Likely to Launch a CBDC

The Bank of Korea (BOK) has announced that there is not much incentive to launch a CBDC because the domestic payment and settlement infrastructure in the country is well-equipped.

February 6, 2020, | AtoZ Markets – Bank of Korea is not poised to issue a Central Bank Digital Currency (CBDC), an official shared the regulator’s position. South Korea has an overwhelming presence of cryptocurrency projects. Nevertheless, the country’s central bank is skeptical of the drive for CBDCs.

Related: Japan Lawmakers to Release Cryptocurrency Proposals Tomorrow

Bank of Korea warns against speculations for CBDC launch

Moreover, the Bank of Korea will continue its exploration of digital assets and the potential for CBDCs. The bank has recently opened a dedicated research department, reported The News Asia. With this move, Bank of Korea is joining the global trend of central banks dedicating resources to exploring the potential for blockchain-based assets.

Official Eun Han, however, shared that Korea already had a well-established electronic payment system. Hence, there were no reasons to issue CBDCs. Indirectly, Han in fact stated that Korea’s need for digital asset payments has been achieved by private companies.

Han also stressed that micropayments are handled by other digital assets and fintech apps. Meanwhile, large-scale government transfers are ensured by the worldwide acceptance of the Korean won.

Central banks in the preliminary stages of exploring CBDCs

A report shared by Han envisions a different potential for CBDCs. An overview of worldwide central banks suggests varying visions for CBDCs in terms of scale and use cases. While the European Central Bank has allowed for direct usage of the asset by consumers, other banks may issue a network for large-scale payments. The explorations of Bank of Canada lead in that direction, suggesting a faster and more secure way for inter-government payments.

Bank of Korea has also joined other central banks with general claims that payment technologies and economic relations are changing and the regulators must adapt. Jooyeol Lee, President of Bank of Korea, already mentioned blockchain as one of the challenges in a changing world of finance.

Han’s statements also aim to dispel any speculations that the Bank of Korea will launch a new type of asset. So far, all central banks are only in the preliminary stages of exploring CBDCs, and even the People’s Bank of China has not issued a deadline for a digital yuan.

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