Bank of Korea: No plans to launch central bank digital currency yet

The Bank of Korea, the Bank of Korea (BOK), said that there are currently no plans to launch digital currencies immediately, and due to concerns about financial stability, it is considered difficult to adopt a similar currency in South Korea.

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As of now, the Korean Central Bank is adopting a “wait and see” approach to issuing government-controlled cryptocurrencies or the so-called Central Bank Digital Currency (CBDC).

Researchers at the Central Bank of Korea published a study earlier this year that modeled how national cryptocurrencies affect the liquidity of commercial banks. The Bank of Korea specifically pointed out that the direct use of this cryptocurrency by the public may reduce bank deposits and reserves, leaving them with cash shortages.

Instead, policymakers plan to step up research into the issue of CBDC, saying:

"We will closely monitor the progress of digital currency issuance by major central banks and actively participate in discussions with international organizations such as the Bank for International Settlements (BIS)."

Careful consideration should be given priority

After Facebook formally decided to announce its cryptocurrency, Libra, the global central bank's idea of ​​a proprietary digital currency has surfaced, which has raised concerns about the significance of digital currencies.

Switzerland, Canada and Singapore have also begun to explore the use of digital currencies and their research work. However, China appears ready to be the first country to launch a government-backed cryptocurrency and plans to launch and run its own digital currency later next year.

Historically, South Korea has been one of the most popular investment and trading markets for cryptocurrencies. However, the authorities have been hesitant to regulate virtual asset classes because of the regulatory oversight of cryptocurrencies that can legalize the industry.

After much thought over the past few years, the country's parliament has passed a bill that will officially classify cryptocurrencies as digital assets and cryptocurrency exchanges as regulated financial services.

More specifically, this regulatory framework will require cryptocurrency exchanges to report and register with the Financial Services Commission (FSC) of the Korean financial regulator. They must also adhere to strict Know Your Customer (KYC) rules, anti-money laundering (AML) regulations, and customer authentication policies.