The Bank of Korea (BOK) plans to issue guidance on cryptocurrency transactions, including a plan to issue a central bank digital currency (CBDC) in the first half of this year.
“The working group has been studying the feasibility of issuing a CBDC and how cryptocurrencies will impact the country's overall financial sector. We will report the results by the end of July,” the bank said in a statement issued on Wednesday.
The statement also indicated that work on a CBDC is still in the “early stages.” BOK officials said the issuance of a national digital currency is not a done deal and that the central bank will continue to monitor the development of cryptocurrencies on a global level.
Some financial advisers are concerned that the sudden and widespread adoption of cryptocurrencies could negatively impact traditional lenders.
Economists argue that CBDCs could fundamentally change the role of central banks in the financial system. However, they add, this is a special situation that requires trial testing before introduction. Digital currencies are a revolutionary instrument that are considered “too risky” to be used as legal tender by many central banks. But in times of financial instability, CBDCs can help speed up banking transactions.
Recently, representatives from the Bank for International Settlements said that policymakers may one day be able to issue CBDCs for settlements between financial institutions.
It remains to be seen whether BOK's interest in cryptocurrencies can help the local digital currency market recover from the government's crackdown on crypto trading.
“The critical factor that amplifies market movement is sentiment. This is the most important factor, since the market is influenced by sentiment. BOK There has been an interest in cryptocurrencies for a long time and in terms of market sentiment, this is a good thing,” said a senior economist at the Samsung Research Institute.
Crypto platforms, which are operated by large local banks, can only be used by customers who have gone through an authentication process. Financial regulators have been given the green light to review and monitor investor transactions to prevent illegal activity. The number of daily transactions, once one of the largest in the world, has plummeted since these laws were introduced...
Government Policy Coordination Minister Hong-Nam-ki said the government has yet to decide how exactly to regulate cryptocurrency trading as relevant agencies have not yet reached a consensus. He also added that the problem of banning or supporting crypto exchangers is still in question.
Read also: CRYPTOCURRENCIES AND CENTRAL BANKS: WHO WILL WORM?
According to http://www.koreatimes.co.kr
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