Developed Countries Have Little Need for CBDCs, Says Bank of Korea Official

The Bank of Korea has again poured cold water on the idea of adopting a central bank digital currency (CBDC), according to remarks made by an official of the central bank.

Little Need for CBDC in Developed Countries

Hong Kyung-sik, Director of financial settlement at the central bank, argued that in Korea, there is a very little need for a central bank digital currency (CBDC).

“In Korea, we already have advanced payment and settlement infrastructure. In addition, the degree of openness is also internationally high,” Hong said.

Money can be moved quickly, cheaply and safely in the country utilizing app-based solutions and by bank remittance, and purchases can be settled efficiently with credit cards, Hong added.

Korea is also adopting Open Banking with APIs that allows for seamless connections to and between financial institutions.

“The possibility that CBDC issuance will soon become a reality in major countries is still small,” Hong noted.

Hong admits that a CBDC might make some sense in developed countries for achieving a few very specific goals such as to avoid monopolization and to maintain resilience of the relevant infrastructure.  

CBDC Might Prove To Be A Useful Tool In Developing Countries

In developing countries especially with poor infrastructure, a central bank digital currency might prove to be a useful tool for inclusion and lower costs associated with cash handling.

Hong adds that a central bank digital currency could support monetary policy while help in the promotion and internationalization of the renminbi.

Hong continues that the central bank will continue to look at blockchain technologies while monitoring the development of CBDC globally but he adds that the institution would be prudent in adopting new solutions.

“The Bank of Korea should promote and support innovation in payment and settlement. Every effort should be made to achieve a balance between efficiency and safety,” he concluded.

Source: Coindesk.com | Image: Bloomberg

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