BOK Governor calls for proactive CBDC measures

BOK Governor Rhee Chang-yong speaks during the MOEF-BOK-FSC-IMF 2023 International Conference. [Courtesy of BOK]

South Korea’s central bank governor is calling for a proactive approach in preparing for a digital economy.

“Introducing a central bank digital currency (CBDC) is now an urgent task for central banks as a new digital financial environment emerges,” Bank of Korea Governor Rhee Chang-yong said.

His remarks came as the central bank rolled out details on a pilot program for the bank’s wholesale CBDC at the MOEF-BOK-FSC-IMF 2023 International Conference on Digital Money held on Friday morning. The Ministry of Economy and Finance, the Bank of Korea, the Financial Services Commission, and the International Monetary Fund jointly hosted the global financial conference where participants discussed navigating a changing financial landscape.

The program will be a two-phase test aimed at demonstrating CBDC’s potential advantages and drawbacks. It also aims to mitigate the risky widespread production of unregulated, speculative cryptocurrencies or so-called stablecoins as well as lay the groundwork for the future integration of new payment infrastructure, such as deposit tokens, the governor said.

Rhee acknowledged that there are still plenty of questions that cannot be answered at this point in time, such as whether to give non-banking financial institutions access to the program.

“We will delve deeper into the matter to understand it from the perspectives from all the stakeholders, including banks, non-banking institutions, private companies, individuals of different age groups, and regulators, as well as find ways to mitigate potential risks,” he added.