Bank of Korea: Developed countries have little need for CBDCs

Posted 31 October, 2019

Hong KyungSik, director of financial settlements at the Central Bank of South Korea stated that Korea, like most advanced economies, has little need for a national digital currency, said  In his opinion, the country's infrastructure already has all the advantages that the new technology offers.

“In Korea, we already have advanced payment and settlement infrastructure. In addition, the degree of openness is also internationally high.” - Hong said, according to conference notes published on the central bank’s website.

Hong added that in Korea, money can be moved quickly, cheaply and safely, using application-based solutions and through bank transfers. The country is also developing open banking, which provides unhindered communication with financial institutions and between them.

The representative of the central bank noted that the introduction of a national digital currency may make some sense. Developed countries can use it to combat monopolization and maintain the sustainability of financial infrastructure. Weak economies may find digital currencies useful for better integration and lower cash processing costs, Hong concluded.

The Bank of Korea has been skeptical of CBDC for a long time and has expressed concern in the past about the development of these currencies. In a document released by the bank in February, it was suggested that digital currencies from the Central Bank could crowd out commercial banks and deplete them, destabilizing the banking system.

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