Regulatory Series on Cryptocurrencies: BoK’s Intentions of Digital Won Depends on Pilot-Testing

South Korea’s central bank (Bank of Korea) has been functioning to design and develop a state-backed digital currency although no such intentions are aggressively put forth for an immediate release just yet.

Bank of Korea officially made an announcement, that it is opting for pilot-testing whether a CBDC would be feasible and stable. They announced ‘digital won’ could be viable at this juncture, as other Asian nations and nations across the globe have been functioning on their own CBDCs.

Ever since the sovereign nations grilling Facebook’s Libra, many central banks appear to be optimistically designing & developing the native cryptocurrencies, and Year-2020 can witness some experimentations in this perspective.

On this backdrop, the development of the PBoC’s digital Yuan appears to be indulged by the ongoing COVID-19 pandemic. On this matter, conference-call was scheduled by the officials of PBoC on April 3rd. Primarily, the developments of the digital renminbi was discussed.

With that perspective, BoK now appears to be positioned in an anticipation of moving in tandem with the paradigm shift in the payment mechanism in the days to come, the essence for the inception of the central bank digital currency (CBDC) has been observed.

However, the technical and legal framework for the introduction of CBDC are reviewed in advance, a research promotion plan for establishing and testing a pilot system is established.

Wherein, they oversea the issuance and research status, in the meantime, CBDC pilot issuance has been promoted mainly in developing countries such as Ecuador and Uruguay for the purpose of improving financial inclusion.

Recently, Sweden and China are actively preparing to issue in response to the decrease in cash use and the emergence of private digital currency. Swedish Central Bank's e-Krona project is already attempted. 

While a troop of six central banks including BoC, BoE, BoJ, ECB, Riksbank and SNB form a CBDC research group.

In Korea, in the recent times, technological innovation in the gamut of payment and settlement is rapidly taking place, and the market expansion of the private sector is also difficult to predict. However, South Korea being a frontrunner for the crypto-driven race, with more number of blockchain based startups, the major commercial banks also deploying the budding technology and most importantly, the legislations placed in the region to stimulate the crypto industry, contemplating all these underlying factors, no wonder if BoK launches the native crypto. Courtesy: BoK

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