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Central bank says Korea has no reason to issue a central bank digital currency

“Korea has advanced payment and settlement infrastructure and has developed methods of payment, so there is no need for a central bank digital currency (CBDC),” said Hong Kyung-shik, the head of the Payment and Settlement Systems Department at the Bank of Korea during the 2019 Payment and Settlement Systems Conference on Oct. 29. Korea already has simple payments, CBDC not needed Hong explained that there are no reasons to issue a CBDC as credit cards have been in wide use in Korea for quite some time and because the country has a diverse range of simple payment services with numerous fintech companies taking part. “It is difficult to break into the Korean finance industry, and fintech companies struggle with joining the wider payment network,” said Lee Sung-bok, a researcher at the Korea Capital Market Institute. “We need to introduce more small licenses.” Issuing CBDC also unlikely in other countries “There is a small chance of major countries issuing CBDCs in the near future,” said Hong, explaining it would only be a good idea under a few specific circumstances. He said that central banks in northern European countries see CBDCs as a way to shake up the existing electronic payment and settlement systems dominated by a few companies, such as Visa or Mastercard. Hong added that Tunisia and Uruguay are considering CBDCs in order to cut costs in terms of currency printing and distribution and improve accessibility. China sees CBDC as a way to make its currency more available globally, according to the expert. In China, IT companies such as Alibaba and Tencent hold a tight grip over payment services, and there are concerns that this structure could lead to problems. “Because these companies earn the trust of consumers through non-financial services and then provide financial services, users may be less wary of them,” said Ahn Soo-hyun, a professor of law at the Hankuk University of Foreign Studies. “They hold influence in the financial industry, yet they may not be maintaining the standards of a financial institution.”

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