Bank of Korea Executive: Evolved Countries Do Not Require Central Bank Digital Currencies
The Bank of Korea dismisses the importance of adopting a digital currency for the central bank. These are remarks that were uttered by a central bank official.
Following a Korea report published on Wednesday by CoinDesk, the financial settlement director, Hong Kyung-Sik at the central bank, contended that this country being an advanced economy country did not need to have a CBDC.
The director said that in Korea, there is already a flourishing payment and settlement system. He also added that the degree of transparency is above standard, and so Korea does require a CBDC.
Hong said that money is transferred within the country in a fast, cheap, and secure manner using the app-based solutions available. Purchases are also made safely via the use of credit cards in Korea. Open banking is available to the people, and APIs are enabling connections and interactions between financial institutions.
“In Korea, we already have advanced payment and settlement infrastructure. In addition, the degree of openness is also internationally high.”
He noted that a CBDC issuance would be the last resort the developed countries should think about. The official from the central bank, however, pointed out that a CBDC would positively impact developed countries in a few specific objectives. An example is a system constructed in Scandinavia to do away with monopolization and sustain the infrastructure resilience.
The developing countries that have substandard infrastructure could, however, make much use of a CBDC. They could use it to bring down the costs of handling cash and use it to enhance inclusion. For the case of China, a CBDC would be vital in supporting the monetary policy and also for the internationalization of the Chinese currency.
The official added that Korea’s central bank would only observe trends in the blockchain platform and how the CBDC will be doing, but it will be reluctant to adopt it. The Bank of Korea has expressed concerns claiming a CBDC potentially could single out commercial institutions in Korea and clear out funds from them, thereby making the banking system unstable.
Hong concluded with,
“The Bank of Korea should promote and support innovation in payment and settlement. Every effort should be made to achieve a balance between efficiency and safety.”