The Central Bank of South Korea plans to create an executive service in the new year, which will study the implementation of the digital currency for the central bank (CBDC).
In its short description of “Monetary Policy for 2020,” published on December 27, BOK said it would continue its research on distributed ledger technology, cryptocurrency and would play an active role in overseeing plus improving the security of payment and settlement systems.
As part of the CBDC research program, BOK plans to attract additional experts in this area. On December 10, the institution posted a list of vacancies for digital currency experts.
In parallel with the organization of its own target group, BOK announces that it will actively participate in discussions with the Bank for International Settlements (BIS) and other relevant international structures in order to keep abreast of the CBDC development in other central banks.
The Bank says it plans to use the BIS Principles for Financial Market Infrastructure (PFMI) to translate the valuation principles mentioned in the supervision of its own financial systems.
PFMI is the basis created by BIS to manage market risks, such as credit, liquidity, depository, settlement, operational and investment risks in payment systems, securities settlement systems, trading storages and other infrastructures.
It was previously known that CBDC is a digital currency issued by a central bank that has legal tender status and other properties of centralized, fiat money.
Back in January 2019, after examining the possible legal and social effectiveness of the CBDC project, BOK concluded that in the near future it would not be able to release a CBDC, which would be available to the general public.
The CBDC study by central banks around the world clearly distinguished the benefits of CBDC for “retail” or “general value” available to the public from “wholesale” CBDC options, which were limited to use by financial institutions.
Earlier, BIS warned that the introduction of “CBDC for retail could lead to loosening the financing of commercial bank deposits” however, it could potentially accelerate the bank’s work.
France also plans to pilot the CBDC for financial institutions in 2020, which was announced earlier this month by central bank governor François Villeroy where Vallroy de Galhau.