| -South Korea’s central bank has published a book on legal matters. -Bank of Korea used blockchain technology to manage the transactions in its 22-month long CBDC pilot program. -Moreover, amplification of existing economic inequalities due to “gaps in digital information.” |
South Korea’s central bank has published a book on legal matters. However, this would need to be addressed to ensure the smooth operations of a future central bank digital currency (CBDC).
South Korea’s Central Bank Issued a Book on Legal Matters
Bank of Korea recently announced it would be testing the distribution of a CBDC in 2021. Moreover, the preparations appear to be going ahead with the bank’s publication of a new book today. However, dedicated to the legal questions raised by the potential issuance of such a currency.
The Bank of Korea used blockchain technology to manage the transactions in its 22-month long CBDC pilot program. The program commenced back in April 2020. And will end up in December of this year.
Testing the currency’s distribution in 2021 represents the third phase of this project, following a focus on technological development and initial operational analyses in phases one and two.
In addition, the bank explains the motivations behind the project and potential benefits of a future digital currency:
”Transformation from cash to digital currency could raise GDP by as much as 3 percent…It would also be an efficient way to realize negative interest rates, overall enhancing the government’s monetary management.“
The prospective usefulness of a CBDC for sustaining negative interest rate policies acknowledged by other central bank representatives. This includes the deputy governor of Japan, in the past year.
While these policies have indeed been adopted in Japan since 2016, and in Europe since 2014. Other central bankers have left the door open to a similar move. Amid the uncertain recovery of their COVID-19, most recently the Bank of England.
Alongside this aspect, an unnamed analyst cited by Korean media has pointed to China’s accelerated rollout of a digital yuan. And mentioned that its prospective impact on the international monetary system is a factor in Korea’s own research and development efforts this year.
The expert highlighted the need to investigate any potentially negative consequences of CBDCs. Such as their amplification of existing economic inequalities due to “gaps in digital information.”
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