[Parker]Why did the Bank of Korea set up a Digitalcurrency task force?
[Parker’s Crypto Story] The central bank said on Tuesday that it established a team dedicated to researching digital currencies. The next day, the Bank of Korea released a report on different central banks moving toward creating their own central bank digital currencies (CBDC). At first glance, the central bank’s decision appears to reverse its previous stance saying that it doesn’t intend to issue a CBDC, but its position doesn’t seem to have changed. The central bank said in a 2019 January report that “Korea doesn’t’ have much need for a CBDC,” adding that other countries, including the United States and Japan, haven’t started making moves toward a CBDC and that Korea has different payment options, including credit card.” As noted, research on digital currencies was few and far between in early 2019. It was halfway through the year when Fed Chairman Jerome Powell started elaborating on the idea of issuing a CBDC. Still, Hong Kyung-sik, head of the payment and settlement systems department at the Bank of Korea, still maintained the skeptical position in October last year at a conference jointly held by the bank and Korean Payment & Settlement Association. Hong cited the absence of research in major advanced economies, which was similar to the explanation back in January. But the tone started shifting this year. Governor Lee Ju-yeol picked CBDC as one of main research themes in his New Year’s message. Then, multiple media outlets reported in January that the central bank is recruiting members for a new team for the CBDC research. When the recruiting procedure ended on Feb. 4, more details came out. The members total seven, and half of them are IT experts. Others have backgrounds in economics, law and management. Under the team, the central also launched a subdivision in charge of researching the technical application of a CBDC. If the division is purely intended for research, the technical division wouldn’t be needed. Some argue the bank’s stance didn’t dramatically change. Hong said that “If the division was only intended to explore theoretical studies, we might not have needed to establish a separate team.” “Still, the central bank can’t unilaterally decide about the issuing of a digital currency as the issue should be discussed with the government.” Observers think that the stance can be more open depending on the situations of different countries. The latest report, released Wednesday, said that “The release of a CBDC for small-value payments would not be in demand as it is in the United States, Japan, Australia and UK, which led us to announce that the central bank is not planning to issue a CBDC, but we will keep researching related issues.” The comment suggests a slight difference from the previous position, as multiple countries embarked on CBDC research.