After China, South Korea may introduce a Central Bank Digital Currency as a part of the country’s FinTech project. Testing the basic functionality of CBDC as a digital concept is underway, according to an industry insider. Although there’s no official statement at present, the administrators may confirm the CBDC update by the end of this year.
Yoon Seong-Gwan, head of the Electronic Finance Department of the Bank of Korea, spoke at the conference regarding bringing CBDC as a concept. “The timing cannot be confirmed, but I think there is a high possibility that it will be introduced in Korea as well, given the global trend and atmosphere,” he stated while addressing the conference. He also added that Korea is planning to prepare at the foundational stage decisively. With this, the officials will be able to begin issuance immediately.
The Bank of International Settlements (BIS) has shared a research paper that reported that 60% of Central Banks globally have invested in pilot projects. Thus, CBDC as a concept is in the first stage of development in most countries. The report by BIS also stated that 86% of developing countries and their central banks had shown interest in first-stage CBDC research.
In South Korea, the second stage is likely to take place by mid-2022. This stage will examine the payment function and the security in the digital payments ecosystem. Additionally, it will also test the use cases in the absence of communication.
If the Korean administration approves the introduction of CBDC to the finance industry in the country, it will imply alterations in the Bank of Korea Act as well. Therefore, political and financial discussions and conclusions must be conducted and brought on the same page to execute the law.
Jin Chang-ho, in charge of CBDC, addressed the topic at a seminar last week. “At present, most central banks are considering expanding beyond CBDC 1.0 and 2.0 to CBDC 3.0.” It is because external pressure from central banks in major countries to introduce CBDCs is so severe that it can be compared to the financial version of the global economy,” he stated and discussed the issue with Bank of Korea officials.
Developing and developed nations have shown more interest in researching the Central Bank of Digital Currency among the global countries. China is ahead of most others as it practically executed the country’s CBDC last month. Presently, China issues official digital currency through their commercial bank, The People’s Bank of China. The same bank distributes it for further financial trade.
The country has taken a decentralized approach to the technology while managing it through centralized channels. This mixed model is being appreciated globally since China will introduce the digital yuan at the Beijing Winter Olympics in Feb 2022. It will be the first global official acceptance to a digital currency backed by Asia’s largest country.