Bank of Korea: “CBDC not likely to be issued”

An official from the Bank of Korea said today that there was little incentive for the national bank to issue a Central Bank Digital Currency (CBDC) and that the bank likely will not issue one, but that research will continue through their newly-established research department.

Eun Han issued the CBDC Response Status of Major Countries report today on the status of countries that have issued CBDC. Based on that report, Han explained that the BOK had determined that there is not much incentive to issuing a CBDC in Korea because of the well-established and widely-adopted e-payment infrastructure in the country.

Some of the e-payment services being released in Korea these days are utilizing blockchain technology. Regardless of their technological platforms, however, is the fact that the BOK sees the utilization of any e-payment solution such as KakaoPay, Samsung Pay, Payco, or Naver Pay, as enough to serve the public’s need for reliable digital instantaneous access to and transfer of their funds for whatever (legal) purpose.

According to the report from BOK, developed countries such as Canada and Singapore, which also have well-established and efficient payment systems, are focusing on CBDC for large-scale settlement, such as for transactions between financial institutions. That type of payment and settlement system would be for larger-than-enterprise use-cases, likely for intra-government settlements that current consumer payment systems cannot accommodate. Issuing CBDC on blockchain or DLT simplifies the transaction process and improves security. On the other hand, some developing countries like Uruguay, Bahamas, and Cambodia are developing CBDC for micropayments to reduce money management costs.

The two routes that international governments are taking to guide them in developing CBDC are not attractive precedents for the BOK at this time, according to Han. Micropayments have been all but mastered by consumer payment services, and the deliberate under utilization of the Korean Won internationally makes it even easier to handle in large amounts for the central Korean government.

This report comes just a few months after Jooyeol Lee, the president of the Bank of Korea, announced to the board of the bank that if they turn away from change, they risk losing the nation’s trust in them. He said this in regard to new technologies, blockchain included, that are being rapidly developed and implemented in international financial settings. He suggested they reorganize or totally reconstruct the personnel management system and organizational structure of the operations of the bank in order to meet the rapidly changing environment and expectations of the equally rapidly changing nation.

In the near-short term, this announcement from the BOK may be just a precaution to allay speculation that they will be releasing a CBDC or pilot project of the sort soon. A measured approach to such a broad adoption of a new technology is certainly the better way to go about it. There have, as of yet, been no announcements or reports from their crypto research center.

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