The Bank of Korea has included digital currency in its strategic planning, accelerating the global central bank's digital currency process

Source: CointelegraphChina

In order to cope with the impact of changes in the global economic and financial environment, the Bank of Korea will enhance its overall research capabilities and prepare for research related to digital currency.

• The Bank of Korea announced its medium- and long-term development strategy on June 9. In order to cope with the impact of changes in the global economic and financial environment, the Bank of Korea will enhance its overall research capabilities and prepare for research related to digital currencies. The document stated:

“The Bank of Korea will actively study the technical and legal issues related to the introduction of central bank digital currency (CBDC). Based on the CBDC promotion trends of other countries, it will promote various preparations for the introduction of domestic CBDC if necessary.”

The Bank of Korea plans to accelerate the research process of CBDC by strengthening research on related technologies, policy formulation and risk management.

From conservative to positive, South Korea's CBDC is about to be launched

The Bank of Korea's digital currency plan has been under research since early 2019, but its research direction is relatively conservative, mainly focusing on the application of blockchain technology in the financial field, and closely following the trends of global central bank digital currencies.

In March 2019, the Bank of Korea released its 2018 Payment and Settlement Report, which included research on central bank digital currency (CBDC), and stated that it would conduct securities settlement tests using blockchain technology in 2019. The researchers said:

“CBDC may affect the overall global financial market and requires careful research before issuance. The Bank of Korea’s position is not to issue its own CBDC, but it will continue related research and closely monitor the trend of digital currencies.”

Although researchers from the Bank of Korea stated that they would not issue their own digital currency, Busan, South Korea, took the lead in discovering a regional digital currency just one month later. In April 2019, Busan, South Korea, became a priority free trade zone and issued a regional digital currency. The digital currency issued by Busan is converted 1:1 with legal tender, and has the sample significance of a stable currency for South Korea's legal tender.

By 2020, the digital currency of the Bank of Korea has also accelerated its pace. On May 18, 2020, the Bank of Korea released a research report on the development status of foreign central bank digital currencies, which studied in detail 12 central bank digital currency cases in 14 countries or regions, and stated:

“After referring to the research and development of digital currencies by foreign central banks, the Bank of Korea will use decentralized technologies in subsequent digital currency experiments to innovate and develop future payment and settlement systems.”

According to Yonhap News Agency, the Bank of Korea will conduct a 22-month pilot test of central bank digital currency starting in March 2020, and complete the design, technical review, business process analysis and consulting work by the end of December 2020.

From a policy perspective, the South Korean government has been closely studying and tracking CBDC. The overall attitude has changed from being relatively conservative to actively supporting it, and it has conducted in-depth research in the fields of artificial intelligence, big data, and blockchain to adapt to the rapidly changing digital innovations at home and abroad, and provide economic forecasts and data support for the formulation of CBDC.

The global central bank digital currency process is accelerating

China is developing rapidly in the research and development and application of central bank digital currency, and the People's Bank of China has revealed the progress of research and development many times. On August 10, 2019, Mu Changchun, deputy director of the Payment and Settlement Department of the People's Bank of China, said that the central bank digital currency will be launched soon and will adopt a two-tier operating system, that is, the upper layer is the People's Bank of China, and the second layer is commercial institutions.

At present, the digital currency of the People's Bank of China has entered the pilot stage. According to the Science and Technology Innovation Board Daily on April 16, 2020, the digital currency of the People's Bank of China (DC/EP) will be distributed to employees of district-level agencies, institutions and directly affiliated enterprises in Xiangcheng District, Suzhou in May as a form of transportation subsidy. Relevant documents show that Xiangcheng District, Suzhou requires employees of district-level administrative units to install digital wallets in April, and 50% of their transportation subsidies in their wages will be distributed in the form of digital currency of the central bank in May.

On the other hand, the digital dollar project also began to be promoted this year. On May 28, the digital dollar project released a white paper detailing the potential applications of the US central bank's digital currency.

After the release of the digital dollar white paper, the project leader, former U.S. Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo, said,

“Compared to other digital currencies, the attractiveness of the U.S. dollar is weakening, and the adoption of a digital dollar has the potential to change this situation, allowing the U.S. dollar to continue to be a stable international currency.”

The World Bank reported in a report released in March this year that more and more central banks are planning to issue CBDCs. Among the 66 central banks surveyed, 20% said they would issue CBDCs in the next six years. Although the issuance of central bank digital currencies requires long-term research and pilot projects, the competition among central banks for digital currencies has begun to accelerate due to changes in the global financial environment.

Original link: https://cointelegraph.cn.com/news/the-bank-of-korea-has-added-cbdc-in-strategic-plan