The Bank of Korea (BOK) recently held a press conference to discuss the potential issuance of central bank digital currency (CBDC). While the central bank has announced plans to test the commercialization of the digital currency, it reiterated that it does not have specific plans to issue CBDC at this time.
During the press conference, Kim Dong-sup, director at the BOK’s Digital Currency Research Division, stated that issuing CBDC involves various issues that need to be decided based on the situation in key countries. He emphasized that the BOK does not feel the need to rush the issuance of CBDC. Instead, the goal of its CBDC project is to be technologically prepared, as the rapidly digitized economy could potentially adopt CBDC in the future. Kim highlighted that a premature issuance of CBDC could create major confusion.
It should be noted that several countries, including the Bahamas and Nigeria, have already issued their own CBDC. However, the BOK seems to be taking a cautious approach, emphasizing the need for careful consideration and preparation.
In line with its plans to test the commercialization of CBDC, the BOK announced its collaboration with Korean financial regulators and the Bank for International Settlements (BIS). The pilot project will involve participation from both the public and private sectors, and it aims to develop a future monetary system.
The BOK’s CBDC pilot project involves establishing the relevant system and testing it on ordinary users in the fourth quarter of next year. CBDC has the potential to reduce commission fees generated from credit card usage and enable the use of smart contracts, thereby reducing the information disparity between sellers and buyers.
Ryoo Sang-dai, senior deputy governor at BOK, stated that this initiative is the first step towards preparing for the infrastructure of the future digital financial system. He noted that the BIS has taken a keen interest in Korea’s CBDC experiment, given the country’s advanced IT technologies and the diverse means of payment systems used by its citizens.
It is important to mention that the BOK initiated its research on CBDC in 2020, and this recent announcement further underscores the central bank’s commitment to exploring the potential benefits and challenges associated with CBDC issuance.
While the BOK maintains a cautious approach, it is evident that the digital transformation of economies and the rise of alternative payment systems have necessitated the exploration of CBDC. As the world watches closely, the BOK’s pilot project will provide valuable insights into the future of digital currencies and their impact on the global financial landscape.
Sources:
– Image source: [Bank of Korea officials speak in a press conference held to discuss central bank digital currency at the bank office in central Seoul on Thursday. [BOK]](https://koreajoongangdaily.joins.com/data/photo/2023/10/05/0006e59e-b8ca-46b4-9e56-bafcc91f00b6.jpg)
– Article source: [Jin Min-ji, JoongAng Daily](jin.minji@joongang.co.kr)
