Bank of Korea Not in Support of Central Bank Issued Digital Currencies

The Bank of Korea (BOK), the country’s central bank, said Monday it opposes the idea of central bank digital currency (CBDC) as issuing CBDC will raise the basic mechanics of monetary policy and implementation, including the bank’s use of open market operations.

The bank is worrying over concerns that such a sudden launch of the CBDC will cost society a lot and cause a moral hazard. Also, issuing CBDC could destabilize the market order because digital currencies don’t currently constitute money.

The reason the BOK opposes a CBDC is because issuing one would ‘raise the basic mechanics of monetary policy and implementation, including the bank’s use of open market operations,’ according to The Korea Times.

Also, issuing a CBDC could destabilize the market order because digital currencies don’t currently constitute money, as per the BOK’s definition. Kwon Oh-ik, a researcher at the bank, said,

“We reviewed the possible feasibility of digital currencies as currency; however, our thoughts are that digital currencies have been exposed to various categories of risk associated with credit, liquidity and legal management. Digital currencies don’t perform as money.”

More so, South Korea’s central bank is bent on remaining the only authority to control the process launching money in the country and it opposes the idea of permitting private sector firms to release any monetary instrument through digital currencies.

A piece from the report went on to state,

“It’s desirable that the BoK is the only entity to entirely control issuing money,” implying that the central bank should have “appropriate control” over financial conditions of lenders and consumers in the market.

The report also indicated that CBDCs may ‘revolutionize’ the banking financial system, but before going live they would need to be thoroughly vetted and also accompanied by further regulation.

“Technology improvements don’t mean private sectors will be allowed to have the rights for money issuance. If this happens, the BOK should regulate them but properly,” 

The release of the report is the BOK’s response about digital tokens after its task force, which has been operational since January this year, has been studying the possibility of issuing a CBDC and how digital currencies will influence Korea’s overall financial sector.

KryptoMoney.com publishes latest news and updates about Bitcoin, Blockchain Technology ,Cryptocurrencies and upcoming ICO’s.