South Korea Urges Action on CBDCs to Ensure Financial Stability
South Korea's central bank governor is calling for action on central bank digital currencies (CBDCs) which he says have become imperative and there is an urgency that can no longer be postponed.
Lee Chang-yong, governor of the Bank of Korea, emphasized that developing a CBDC is a complex process that involves a lot of planning. He also said, "If stablecoins become established as a digital payment method and crowd out other payment methods, it is questionable whether the system will operate stably."
In a speech at the "2023 MOEF-BOK-FSC-IMF International Conference on Digital Money" held in Seoul last week, Chang-yong said, "As stablecoins have recently begun to be issued, CBDC is a research project that can no longer be postponed from the central bank's perspective."
Chang-yong's comments come as the Bank of Korea is still deciding whether or not to issue a CBDC. He said that while there are many challenges to issuing a CBDC, he believes that the benefits outweigh the risks.
South Korea to prioritize innovation
The conference also provided a forum to discuss opportunities and challenges from digital money with distinguished policymakers, academics, and market participants from around the world.
South Korea has already taken steps to regulate virtual assets, with legislation enacted earlier in the year to bring virtual assets under regulatory control, aimed at ensuring investor protection. This regulatory framework is slated to take effect from July 2024.
"We believe that balancing innovation and investor protection is crucial," said Kim So-young, vice chairman of the Financial Services Commission. "This is the path to sustainable development in the digital asset market."
Key takeaways:
- South Korea's central bank governor is calling for action on central bank digital currencies (CBDCs).
- He believes that the benefits of issuing a CBDC outweigh the risks.
- South Korea has already taken steps to regulate virtual assets.
- The government is committed to balancing innovation and investor protection in the digital asset market.