The Bank of Korea has already a lot on the plate, with the attacks on the exchanges and the need for the regulation on the exchanges are making it difficult for an idea like CBDC to get executed, simply put it seems like this is not the right time to think about the CBDC.
Apart from that, the BOK is worried about what implications CBDC would have upon the country’s economy, issuing a statewide uniform digital currency will cause issues with the credit, liquidity, legal, counterparty default management, the aspects which are not properly monitored yet.
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.
Another reason for the bank’s decision supposedly comes out of worries for its consumers, with the institution fearing that cryptocurrencies can possibly be used as a “measure of crime.”
Even though the reports and studies have shown that the amount of cryptocurrencies used for illicit activities is negligible compared to fiat cash, BOK still seems concerned about it.
Decentralization, something which all government fears
Could fear of decentralization be the real reason:
It’s desirable that the BOK is the only entity to entirely control issuing money.
What is more, based on the words of the researcher, it appears that the January task force has managed to identify the ‘revolutionary’ potential of CBDC, as the researcher said it may “revolutionize” the banking financial system. However, despite the fact that a move of the kind could be revolutionary, BOK remains unwilling to put it in motion out of fears of decentralization. The bank holds firm that it should be the central authority on money issuance:
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 Bank of Korea (BOK) confirmed it had launched a study into cryptocurrencies back in January. The country has been exploring the potential for issuing a Central Bank Digital Currency (CBDC).
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