South Korea’s Central Bank Sets a Task Force to Research Central Bank Digital Currencies (CBDCs)

Announced in a Dec. 26 report titled “Monetary Policy for 2020,” the Bank of Korea will hire experts to study the effects of distributed ledgers, crypto currencies and CBDCs on financial settlements and security. The groups will also “keep an eye” on other countries’ experiments with CBDCs.

In the past year, the U.S. Federal Reserve and the European Central Bank announced investigations into digital replacements for cash, as the People’s Bank of China readies to pilot its “digital yuan” in 2020. State-backed digital currencies may improve international and internal settlements as well as mitigate fraud, say backers.

The task force could be formed as early as January 2020, reports Coin Desk Korea.

In the document bank officials said, “[T]he bank will enact assessment principles, reflecting domestic conditions, to improve the effectiveness of its oversight of the payment and settlement systems,”

The bank found from a previous task force that CBDCs could adversely affect the demand for traditional banking services, which could impact financial stability. The task force was disbanded in January 2019

In October, Hong Kyung-sik, the head of the Bank of Korea’s Banking and Finance Bureau, said an advanced economy with a credit system would not benefit from CBDCs.

Still, this past September, the bank hired an expert to study crypto currencies.

According to the Bank for International Settlements, a “majority” of central banks in developed and emerging economies (of 63 surveyed) are researching CBDCs.