The Bank of Korea (BOK) has recently expressed that it has started studying cryptocurrencies. In an official statement on Wednesday, it also notes the planning of issuing CBDC (Central Bank Digital Currency) within few months.
Korea Times reported on Wednesday that it is set to reveal its guidelines regarding cryptocurrencies and also the plans to issues CBDC by June.
“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. We will announce updates on this issue by the end of June”.
Too Early to decide on issuing CBDC
As per the statement, the CBDC study is still at “early stages” for its composite elements. BoK added, thus it was too early to decide on whether central bank of South Korea would issue CBDC. Moreover, it stated that it had kept a eye on global developments.
Although, cryptocurrency could disrupt traditional investors if at all it is widely offered. As the result, economists believed that digital currencies are ‘unchartered waters’ and need to be test before CBDCs are introduced.
The reports also include that central bank announced the launch of cashless society pilot in its ‘2017 Payment Report’. Accordingly, the BoK has started looking into cryptocurrencies and Blockchain.
Related Coverage – Bank of Korea to Launch Blockchain Based Cash-Free Society Pilot Project
In a previous month, South Korea’s central bank launched a pilot project for a coinless society trail. However, the government of South Korea phasing out money in 2016 along with BoK aiming for cashless society within 3 years.
A senior economist at the Samsung Economic Research Institute said,
“The critical factor that magnifies the way a market moves are sentiment. This is most important as a market could be pushed ahead by sentiment. The BOK’s interest in digital currencies isn’t that new and is good in terms of market sentiment”.
The process to Buy and Sell on CBDC
It is allowed to buy and sell cryptocurrencies only to those customers who has passed the checking procedures like identification. However, in order to prevent illegal activities, a free pass was given to financial regulators as to check transactions.
Remarkably, Korean market was once regarded most active market in crypto trading according to its number of transactions.
Hong Nam-ki, Minister of Government Policy Coordination, stated that “it has not yet decided how to regulate crypto trading as relevant agencies have failed to reach consensus”.
Earlier, European Central Bank officials are of the opinion that central bank digital currencies (CBDCs) may answer to the need of cashless society and change the way consumers control their money.
Bitcoin is not the Answer
Jacqueline Loh, ECB executive board member Benoit Coeure and Bank of International Settlements Markets Committee chair had said:
“Bitcoin is not the answer to a cashless society. It means that digital money is the way to the future. However, they say in that piece that existing public cryptocurrencies such as Bitcoin are not that future”.