Last autumn, the Depository financial institution of Korea announced it would be testing the distribution of a primal bank digital currency in 2021. Preparations appear to be going ahead on multiple fronts, with the banking concern'southward publication of a new book today dedicated to the legal questions raised past the potential issuance of such a currency.

According to a summary in Korean media, the volume calls for revisions to the police to ensure that a future CBDC could successfully operate. The Bank of Korea has notably been using blockchain technology to manage the transactions in its 22-month long CBDC airplane pilot program, which commenced back in April 2020 and will wrap up in December of this year. Testing the currency'due south 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.

The newly-published book confirms this timeline and scope, outlining that "the Banking company of Korea is conducting an analysis of operational procedures for a CBDC rollout, and outside consulting is also underway. This yr, we're going to launch a CBDC pilot system in a virtual environment, and run tests to verify its functions and safety." In addition, the banking concern states the motivations behind the projection and potential benefits of a futurity digital currency:

"Transformation from cash to digital currency could enhance Gdp by as much every bit iii pct. Digitalization of currency would accelerate currency circulation and reduce maintenance costs. It would also be an efficient way to realize negative involvement rates, overall enhancing the government'south monetary management."

The prospective usefulness of a CBDC for sustaining negative interest rate policies has been acknowledged by other key depository financial institution representatives, including the deputy governor of Nihon, in the past year. While these policies accept indeed been adopted in Japan since 2016, and in Europe since 2014, other central bankers have left the door open to a similar movement amidst the uncertain recovery of their COVID-nineteen economies, most recently the Bank of England.

Alongside this attribute, an unnamed analyst cited by Korean media has pointed to Cathay's accelerated rollout of a digital yuan and suggested that its prospective bear upon on the international monetary system is a gene in Korea'southward own research and evolution efforts this twelvemonth:

"The U.Due south. dollar may exist the standard currency for cash, but China is aiming to brand digital yuan the new dominant medium. South korea needs to develop strategies on what position the country volition have in the new budgetary era."

The proficient further highlighted the need to investigate any potentially negative consequences of CBDCs, such equally their amplification of existing economic inequalities due to "gaps in digital information."