- The Bank Of Korea announced that due to a lack of incentive for the launch of a central bank digital currency (CBDC).
- Korea already has a strong and wide-reaching e-payment infrastructure in place that is already dominant in the country.
- Countries like Canada and Singapore are investigating CBDCs for large-scale payments.
The Bank Of Korea announced that due to a lack of incentive for the launch of a central bank digital currency (CBDC), there is a lesser probability that the bank will make efforts to issue a currency. This will, although not hinder further research on CBDCs due to the recently established research group.
Korea already has a strong and wide-reaching e-payment infrastructure in place that is already dominant in the country, and the bank sees no benefits to replacing this with a digital currency based infrastructure.
Although some e-payment services utilize blockchain technology to process payments, the majority of the e-payment providers serve enough functionality to justify the need for additional digital payment formats.
Multiple countries have been jumping onto the digital currency bandwagon with many countries in Europe, Asia, and North America, making efforts to investigate CBDCs to find out whether there are any gains to be had over issuing a new currency form. Countries like Canada and Singapore are investigating CBDCs for large-scale payments.
This kind of system is mainly focused on use cases larger than enterprises or intra-government payments. Other developing countries like Uruguay and Cambodia are looking into CBDCs as a means to micropayments to reduce costs in managing cash flow.
The current digital payment infrastructure present in the country is sufficient for consumer payments and their financial services, and the Korean Won is easier to handle for the central government due to under-utilization in international applications.
This is also an interesting development since it was only a few months ago that the president of the Bank Of Korea, Jooyeol Lee, stated that
“There was an inherent need for the bank to restructure its organization of the bank and the personnel management to stay updated with the rapidly changing world.”
He saw newer financial technologies like blockchain were crucial to maintaining the public’s faith in the country’s banking system and keeping it growing.
Although there have been strong speculations that the investigations that were being held into CBDCs were going to lead to Korea launching their own digital currency, for the time being, this announcement settles the case.
This could also mean that this is a temporary decision, and with time as more countries make successful forays into digital currencies, the Bank of Korea might change its decision.