The Governor of the Bank of Korea, Rhee Chang-yong, recently emphasized that South Korea does not have a plan to launch a Central Bank Digital Currency (CBDC) before the United States and European countries. He stated that the benefits of leading in CBDC issuance are minimal and signaled a strategic decision to adapt to global developments.
Delay in CBDC Launch: A Strategic Move
During a CBDC seminar, Governor Rhee Chang-yong stated that launching a CBDC before major global players would not be in South Korea’s interest. Despite the country’s significant efforts in CBDC research and development, the central bank believes that timing is crucial.
As a result, the Bank of Korea will postpone CBDC issuance until the United States and European countries take action. This decision, based on a strategic approach, positions South Korea to observe the experiences of leading economies and learn from them. Governor Rhee Chang-yong’s statement underscores the importance of synchronization in the international CBDC landscape.
CBDC Pilot Test in South Korea: An Overview
As part of its ongoing commitment to exploring CBDC possibilities, South Korea plans to conduct pilot tests that allow citizens to experience CBDC through coupons.
In the fourth quarter of 2024, approximately 100,000 people will test CBDC using public coupons. These coupons, provided by state and local governments, will be converted into digital deposit certificates (CDs) by banks and serve as digital coupons for the retail sector.
This pilot test initiative aims to gather valuable information about CBDC usage and public acceptance. It demonstrates South Korea’s proactive stance in embracing emerging financial technologies while maintaining a cautious approach in line with global developments.
Evolution of the Crypto Environment in South Korea
Behind the thriving crypto environment in South Korea, the government has implemented a supportive regulatory framework. Despite occasional tightening measures, such as those taken after the Terra-LUNA crisis in 2022, the government remains committed to fostering a favorable environment for the crypto industry.
The Bank of Korea is preparing simulations involving CBDC applications in collaboration with the Korea Exchange. These tests reflected a forward-looking approach to integrating blockchain technology. They also included settlements facilitated by security tokens, enabling the issuance of tokenized assets.
South Korea’s nuanced approach to CBDC and its participation in various pilot initiatives demonstrate the country’s ability to balance innovation with prudent financial practices.