- The Bank of Korea (BOK) announced today that it was readapting the strategy for the potential issuance of a central bank digital currency (CBDC).
- The initial phase consists of structuring the requirements and frame of CBDC, this will run for five months until July 2020.
- This program initiated in March and is expected to process for 22 months until December 2021.
The Bank of Korea (BOK) announced today that it was readopting the strategy for the potential issuance of a central bank digital currency (CBDC).
Though the bank has no such immediate plan to launch a currency, the pilot project is to ensure that it is ready to do so due to the changing market scenario. This scheme is in line with similar steps adopted by other developed countries like the United States and Japan.
The pilot will include technical as well as legal review
Followed by a theoretic study conducted in February 2020, the program will include technical as well as a legal review of CBCD issuance. This program is initiated in March and is expected to process for 22 months until December 2021.
The initial phase consists of structuring the requirements and design of CBDC, this will run for five months until July 2020. Due to this, there will be a review of technology which is essential for the implementation of the currency and is planned from April until August.
The BOK had taken an interval to look at the stance over digital currency experiments. The so thought came as the digital form of fiat money is still influencing users, with the concerns at BOK whether the issuance of digital currency could make its authority powerless and may weaken the financial system of the country.
Release of digital currency in South Korea
The announcement made a clear statement that the bank is not willing to release a digital currency immediately in South Korea.
One of the officials from BOK said that though the U.S. and Japan had no recent plans to issue a CBDC in the coming future, they changed their mindset recently to develop their research in the emerging system.
The BOK also decides to be proactive in the highly fluctuating payment environment in the country as well as overseas. That is why the BOK is introducing a pilot system to check the technical as well as legal issues which will affect its introduction.
China is the most active player in implementing the CBDC. The People’s Bank of China recently revealed that the development of CBDC was its prime priority.