South Korea’s Central Bank Approves A Pilot Program For Launch of Central Bank Digital Currency
On Monday, April 6, the Bank of Korea has announced the launch of a pilot program for the central bank digital currency (CBDC). Although currently there’s no official plan of launching the Digital Won, the central plans to explore the logistical viability of having a digital currency in the country’s economic system.
The Monday announcement states that Bank of Korea launched its pilot program last month and plans to continue it for a period of 22 months up to December 2021.
Along with South Korea, major economies across the globe like China, the U.S., Japan, and other countries are exploring CBDC projects in their country. Speaking to the Korea Times, a BOK official said: "The U.S. and Japan had had no plans to issue a CBDC in the near future, but they changed their stance recently to enhance research in the emerging area. The BOK also decided to remain proactive in the rapid shift in payment environments here and abroad, so we are going to set up the CBDC pilot system and check technical and legal issues surrounding its introduction here."
The initial phase of this project will run for the first five months up to July 2020. This will be further overlapped by a technology required to implement the currency in the next phase between April to August.
On one hand, the bank will be working on the technical aspects of the CBDC while on the other hand it will work on regulatory and legal aspects like the necessary amendments to the Bank of Korea act.
However, the bank has made it clear that it doesn’t plan to launch the digital currency any sooner since the demand of the cash market remains high at this stage. The Bank of Korea says that the primary motive behind its pilot program is to remain prepared for any changes in the market over time.
The announcement read: "The need to issue a CBDC in the near future still remains slim when considering the demand for cash that still exists, the competitive payment service market and high-level financial inclusion, but there is a need to be able to quickly take steps in case market conditions at home and abroad change rapidly.”
As said, other major economies across the globe have been already gearing towards a digital currency economy. Besides, with the current global economic scenario, the global banks will be willing to work on more efficient system of income distribution using the blockchain technology.