Bank of Korea Considers Having a Central Bank Digital Currency (CBDC)

In the past few weeks, South Korean regulators have been working on measures that can be conducive to the growth of crypto markets in the country. Just two days back, the legislators of Korea’s Democratic Party drafted a bill in order to legalize Initial Coin Offerings (ICOs) in the country.

Now, another report from the Korea Times suggests that the central bank of Korean is now weighing options to have its own central bank digital currency (CBDC). In a statement, the bank said: "A taskforce has been studying the possibility of issuing a CBDC and how digital currencies will influence the country's overall financial sector since January. We will announce updates on this issue by the end of June.”

It has to be noted that such plans of CBDC are still in its early stage as the monetary authority said that it will be keeping an eye on all the global developments taking place.

This announcement from the Bank of Korea comes soon after it said that it is working on several blockchain and digital currency use cases for implementing a digital and cash-free payments society. Earlier reports show that the central bank has already started working in a joint-research with other banks for implementing the decentralized technology.

Moreover, economists have also raised concern that such sudden launch of the central bank digital currency could possibly destabilize traditional lenders. However, they agreed to the fact that CBDCs can revolutionize the banking financial system but before going live they need to be thoroughly tested through multiple trials.

A senior economist at the Samsung Economic Research Institute that BOK’s entry in the crypto market can drive a positive sentiment. He said: "The critical factor that magnifies the way a market moves is sentiment. This is most important as a market could be pushed ahead by sentiment. The BOK's interest in digital currencies isn't that new, and is good in terms of market sentiment.”

Last month in April, Seoul Mayor Park Won-soon proposed an idea of having the city’s own digital currency called ’S Coin’ which can be used to compensate private contractors and fund public welfare programs in the city. It can also be used for rewarding public employees and citizens working for environment preservations by saving resources like water, gas and electricity.

Park also emphasized the benefits of blockchain technology and how they should be implemented to drive further the digital payment revolution. He said: "As Seoul is the world's leading city in the field of information and communications, including the Fourth Industrial Revolution, I think we should study new technologies such as blockchains.”