[NEWS] Governor of the Bank of Korea emphasizes the urgency of introducing CBDC, expresses concern over the spread of stablecoins

On the 15th, Governor Lee Chang-yong of the Bank of Korea (BOK) stressed that the introduction of a CBDC (Central Bank Digital Currency) is an urgent and urgent issue during a digital currency conference. Yonhap News reported on the same day.

Governor Lee stated that "digitalization is an undeniable trend," and argued that central banks around the world should prepare to respond to the rapidly changing financial situation.

In addition, Governor Lee mentioned stablecoins, which are becoming increasingly popular around the world. Regarding the spread of stablecoins such as Tether (USDT) and USD Coin (USDC), he said, "They pose new challenges for central bank operations."

Furthermore, he expressed concern, pointing out that the spread of stablecoins "could diminish the role of legal tender and undermine the effectiveness of monetary policy."

Governor Lee is particularly concerned about the stability of stablecoins. He said that despite the name stablecoin, the lack of stability, such as the fact that it moves in a way that is contrary to the underlying assets and that it sometimes experiences unstable situations, will be a challenge for finance and central banks.

Governor Lee said that there is an urgency to consider the introduction of CBDC, whether it is retail or wholesale, due to this situation.

Large-scale CBDC trial planned for 2024

Last month, South Korea announced that it would issue a pilot version of CBDC to 100,000 people, or 0.2% of the country's population, in 2024. The pilot CBDC will only be usable for designated payments and cannot be used for other purposes such as personal remittances.

The initiative will also include technical experiments to evaluate the feasibility and effectiveness of CBDC issuance and distribution. As an example, a proof-of-concept experiment is planned for the feasibility of remittance and trading of carbon emission credits and payment tokens.

At the meeting on the 15th, Governor Lee also mentioned that the Bank of Korea is currently conducting a proof-of-concept experiment focusing on the integration of wholesale CBDC with tokenized bank deposits. He then revealed that he is working on a "second CBDC pilot project" to consider the issuance of digital currency by banks and other institutions.

On the other hand, he points out that there are still unresolved issues, such as the participation of non-financial institutions and the establishment of appropriate regulations.

Reference:Press
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