South Korean news agency The Korean Herald reported today that the nation’s central bank has said it has no plans of issuing a digital currency in the near future.
Cryptocurrency has taken center stage in many financial institutions around the globe and has found its way into major economic discussions in recent times, this includes the World Economic Forum held in Davos. However, South Korea’s major financial institution has for now chosen to distance itself from the whole shift to digital currencies.
After research conducted by the Bank of Korea on central bank digital currency (CBDC) regarding the possibility of issuing a cryptocurrency that is backed by the central bank or the government, it concluded that there is no urgent need for such implementation. The report was aimed at gathering legal and social data for the effective implementation of CBDC.
Citing an unnamed bank official, the bank said: “We have no plans to issue any type of CBDC that is available for all people in the near future.” It appears that while plans to issue a CBDC is on hold, the bank will continue to research the space and gather more information such as cost implications and benefits. The bank official further said: “We have to work further on the benefits and costs of CBDC implementation first.”
A number of banks have been considering a CBDC for a while now. Most central banks have come up with reasons why they wouldn’t support such innovation claiming the tech has yet to live up to the hype, however, a few have gone ahead to issue theirs.
Mixed feelings surrounding the concept of a national cryptocurrency have been in play for a while now. The Bank of Thailand wants to use a CBDC for internal bank transactions. Speculations surrounding Iran’s national currency as primarily to evade sanctions from the US. Last month, the US Federal Reserve was of the opinion that implementing a CBDC would be out of naivety. Meanwhile, the Bank of England has over time warmed up to the idea of a CBDC after claiming cryptocurrency had failed as both a store of value and a medium of exchange.
Regardless, one thing is certain, banks are settling for the idea of replacing current banking systems with distributed ledger technology, especially to reduce human error and improve transparency. The possibility of a digital currency from there shouldn’t be quickly dismissed.
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