South Korea’s Central Bank to Establish a CBDC Task Force in 2020

The Bank of Korea announced on December 26th that it will appoint specialists to examine how cryptocurrencies, distributed ledgers and CBDCs (central bank digital currencies) affect financial stability and security.

The information was part of a report titled “Monetary Policy for 2020” and also stated that the task force will “keep an eye” on CBDCs in other countries. This group of experts would be assembled in January 2020, at the earliest.

This interest in digital assets is not something new as the U.S. Federal Reserve and the European Central Bank also investigated digital replacements of money during the past year, while the People’s Bank of China is preparing to launch its “digital yuan” in 2020. CBDC supporters believe that state-backed coins would improve agreements and reduce fraudulent activities.

As cited in the report:

“The bank will enact assessment principles, reflecting domestic conditions, to improve the effectiveness of its oversight of the payment and settlement systems.”

As part of Bank of Korea’s previous research task force (dissolved in January 2019) it was found that state-backed cryptocurrencies can negatively alter user interest in traditional banking services and thus influence banking stability as we know it.

Hong Kyung-sik, head of Bank of Korea’s Banking and Finance Bureau, noted in October that CBDCs will bring no benefit to an advanced economy with a stable credit system.

Nevertheless, in September the Bank of Korea did appoint a specialist to study cryptocurrencies.

As the Bank for International Settlements notes, out of 63 surveyed central banks from developed and emerging economies, a ‘majority’ are researching CBDC possibilities.