The South Korean central bank is the latest in the list of national banks that has revealed its intentions with a central bank cryptocurrency (CBDC).
South Korea joins the crypto research race
According to local media, the Bank of Korea has started hiring crypto asset experts, signaling that the central bank could start developing its own CBDC. The bank emphasizes that “successful candidates” will lead research on blockchain solutions and digital payment platforms.
The BoK has yet to confirm that it will introduce a CBDC. However, the likelihood is high since China is already well advanced and Japan has also entered the research phase.
Bank governor Lee Joo-Yeol had previously told executives that “turning away from change” could run the risk of losing the nation’s trust. Nobody wants to be left behind as Asia continues to lead the way in innovation in digital payments.
The Bank of Korea published a paper earlier this year examining the impact of a CBDC on the financial system. The bottom line: A digital currency could cause problems with the existing system.
According to the bank, a central bank digital currency could compete with commercial banks. This could result in a decline in deposits, which in turn would affect creditworthiness. The solution would be that the central bank makes digital currencies available to commercial banks, which would increase acceptance and circulation.
The fear of Facebook
It seems that Facebook has reached into a digital hornet nest with its own ambitions for global financial dominance. Since Libra’s announcement, the world’s central banks have been paying attention to crypto.
China should also see the American technology giant as a direct threat to its own financial system, although the platform is blocked by the large firewall. One possible result is that U.S. regulators are approving Zuckerberg cryptocoin with a digital yuan for fear of Chinese dominance. At the moment, however, Libra is still facing strong resistance at home and abroad.
Every week, another central bank reveals its research on digital currencies, and the list is growing.
Last week, the governor of the Bank of France said that the development of a crypto euro was urgently needed. The President of the European Central Bank, Christine Lagarde, says that the bank must have a head start on cryptocurrencies.