South Korea’s central bank has decided against issuing a CBDC, citing risks associated with liquidity and credit, as well as the legal implications of managing such a currency.
The Bank of Korea (BOK) came out against issuing a central bank digital currency (CBDC) on Monday. It cited concerns that doing so would fundamentally alter monetary policy and potentially destabilize the open market.
In early May 2018, reports[1] emerged via South Korean media outlets of ongoing work by the BOK to understand the broad ramifications of cryptocurrency and the potential for a CBDC. "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," BOK said in a statement at that time. "We will announce updates on this issue by the end of June."
In the latest report, covered by The Korea Times[2], Kwon Oh-ik, a researcher affiliated with the central bank, said, "Digital currencies do not perform as money."
Kwon continued:
"We reviewed the possible feasibility of digital currencies as currency; however, our thoughts are that digital currencies have been exposed to various categories of risk associated with credit, liquidity, and legal management."
In related news, the Financial Services and the Treasury of Hong Kong[3] has confirmed in recent weeks that it too has no plans to issue a CBDC, though it is still considering the possibility. The Governor of the Bank of England, Mark Carney, also recently speculated on CBDCs and raised the question:
"Is our role going to be changing the payment systems and helping private providers of digital money, or will we go all the way to a central bank digital currency?"
Melanie Kramer is a freelance FinTech, blockchain, and cryptocurrency writer based
