Bank of Korea Director: No Need for CBDCs in Developed Countries
- The payment system in Korea is very developed, safe and sending money is not that expensive.
- Still, the Bank of Korea will continue to monitor the development of CBDCs amid their concern that such currencies may destabilize commercial banks.
A view of the building of Bank of Korea, the national central bank of South Korea in Seoul, South Korea on 31 August 2019. Chintung Lee/Shutterstock
It looks like the Bank of Korea has no intentions whatsoever of embracing a central bank digital currency (CBDC), or at the very least recent comments by a bank official confirm just that.
Judging by notes from a payments conference in Seoul and the Wednesday report by CoinDesk Korea, the director of financial settlement at the central bank, Hong Kyung-sik sees no need for a CBDC in Korea. As the notes read:
“In Korea, we already have advanced payment and settlement infrastructure. In addition, the degree of openness is also internationally high.”
Hong elaborated that in South Korea money can be transferred fast, safe and cheap via apps and bank remittance. The development of open banking in the country is on its way and APIs will allow smooth linkage among financial institutions.
Hong shared his opinion:
“The possibility that CBDC issuance will soon become a reality in major countries is still small.”
Nevertheless, Hong does see some sense for CBDCs in developed countries when used in very particular use cases like the one in Scandinavia where they prevent monopolization and cultivate the flexibility of the related infrastructure with digital currency.
However, when we talk about developing countries the bank official sees a totally different picture. States with poor infrastructure would benefit from CBDC by enhancing inclusion and lowering cash-related taxes.
In China for example, a digital currency would bolster monetary policy and will aid in popularizing the renminbi worldwide.
The Korean central bank will still keep an eye on blockchain-related technologies and observe CBDC developments around the world but for Hong the bank will be careful when adopting new solutions.
He summarized his view:
“The Bank of Korea should promote and support innovation in payment and settlement. Every effort should be made to achieve a balance between efficiency and safety.”
The skepticism coming from the Bank of Korea towards CBDC is not something new. In February they published a paper in which it was suggested that a CBDC may displace commercial banks and vacuum all their funds, thus destabilizing the whole banking system.
- The head of China’s central bank digital currency institute said the e-CNY has undergone a major upgrade, and should be made available as an option in all retail scenarios.
- The PBOC official noted that platforms can integrate the CBDC in the short term using QR codes, and focus on upgrading their payment tools in the long run.
Office building of the People’s Bank of China. Flickr
- The current governor of Florida, Ron DeSantis, announced he is joining the race for the 47th president of the U.S. during a Twitter Spaces event on Wednesday.
- During his speech DeSantis declared his support for Bitcoin and the wider crypto space, noting that if Joe Biden is re-elected “they’ll probably end up killing it”.
- Planned for 1 April, the CBDC trial will involve real consumers and real transactions, though they will be limited to a certain number of customers and transfers.
- The pilot, however, will not be opened to the general public in its first phase, and will only be opened to customers chosen by the 13 participating local banks.