- The bank is taking a “wait-and-see” approach towards issuing a government-controlled currency.
- It stated that the public direct access to a cryptocurrency could reduce commercial banks’ deposits and reserves.
The Bank of Korea (BOK) has stated that it is not planning on launching a digital currency anytime soon. Due to financial stability concerns, the central bank sees the adoption of something like this to be complicated. It’s taking a “wait-and-see” approach towards issuing a government-controlled currency or currently known as central bank digital currency (CBDC).
Earlier this year, researchers from BOK published a study, which modeled how a crypto national coin could affect liquidity at commercial banks. The bank stated that direct public access to such a cryptocurrency could decrease banks’ deposits and reserves, resulting in a cash shortfall. Hence, the policymakers are planning on strengthening their research on CBDC issuance.
The bank said:
We will closely monitor the progress of the issuance of digital currency by major central banks and actively participate in related discussions with international organizations such as the International Settlement Bank (BIS).
BOK’s stance on a proprietary digital coin comes after Facebook dropped the secrecy surrounding Libra, its own upcoming cryptocurrency, which increased the concerns regarding the implications of digital money. South Korea has been one of the most active investing and trading markets for crypto. However, due to their belief that cryptocurrency regulation could lend legitimacy to the sector, the authorities have been hesitant to regulate the virtual asset class.
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