Korea Doesn’t Plan to Launch a Cryptocurrency Yet
Last updated on November 1st, 2022 at 04:25 pm
Korea’s National Bank says there are currently no plans to launch any digital currency, citing the adoption of something of that nature very difficult in the country for now.
The Bank said cryptocurrency has huge financial instability issues and introducing a digital currency in the country could cause more harm than good.
Korea Skeptical About Crypto
Unlike its neighboring Asian country, China, Korea has always held back its stance in the introduction of a Central Bank cryptocurrency. The bank has always taken the ‘watchman’ approach, before issuing any government-licensed cryptocurrency.
The Korea’s Central Bank says it still wants to watch the crypto development before introducing any crypto-related currency to the Korean market. So, the idea of a Central Bank’s digital currency or government-monitors cryptocurrency will be on hold for now, according to the Bank of Korea.
Researchers at the Central Bank of South Korea released a research report earlier in March this year. In the report, they revealed how the liquidity of commercial banks could be affected by a national crypto coin.
According to the report, the introduction of digital currency could weaken the intermediary role the commercial banks.
In particular, they mentioned that the interest of the public on such coins could drastically lower bank deposits. In other words, if the public gets access to cryptocurrency, banks could start running at a shortfall, which will affect their lending business.
While this issue is certainly not unique to the Bank of Korea, it is one that they are anxious to avoid, according to the researchers.
Korean Cryptocurrency Could Come After Findings
The Korean government is not completely wiping off its interest in floating a cryptocurrency. In fact, the government has a keen interest in setting up a government-backed cryptocurrency as long as it won’t affect the economy negatively.
According to the Bank, it’s been cautious not to cause economic hardship or financial difficulties when it eventually launches the digital coins.
In line with the bank’s commitment, policymakers are closely monitoring the growth and development of cryptocurrency. In particular, the Bank states that it’s currently observing the progress of the issuance of digital currencies.
The government is currently participating in similar discussions with International Settlement Banks (BIS). If the research and discussions proved fruitful, the Bank of Korea would look to launch its own central Bank cryptocurrency, the bank said.
The Korean Bank started thinking in the line of digital currency when Facebook made a recent post on the uniqueness of a cryptocurrency. Facebook was making this statement while using its coin, Libra, as an example.
China Leading The Way For Government-backed Digital Currency
South Korea is not the only country considering the adoption of a government-backed digital currency.
Presently, countries like Singapore, Canada and Switzerland are looking at the possibilities of adopting digital currencies. Many of them are still researching on its feasibility.
However, China is steady on its plans to launch a digital currency. The Chinese government has been the most committed to the digital currency launching project. It has set up plans to have its government-supported cryptocurrency in 2020.
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