The Bank of Korea (BOK) has initiated a test program to check the capabilities and necessary technologies required for launching a central bank digital currency (CBDC). Despite the testing, though, the bank noted that the chances of issuing its own cryptocurrency are slim due to lots of competition.
BOK Tests CBDC
A local report from earlier today informed about the actions from the Bank of Korea. It indicated that the test program began last month and will provide a decisive conclusion by the end of next year.
The idea behind the testing is to identify the necessary technologies and legal provisions required to launch a blockchain-based digital currency.
However, the bank has said in a press release that the demand for such cryptocurrency is not sufficient enough at the moment. However, they should be prepared if the situation changes:
“The need to issue a CBDC in the near future still remains slim when considering the demand for cash that still exists, the competitive payment service market, and high-level financial inclusion. But there is a need to be able to quickly take steps in case of market conditions at home and abroad change rapidly.
[…] BOK seeks to set up a pilot CBDC system in order to take preemptive steps against changes in the environment.”
Is BOK Wrong?
Although the Bank of Korea might not consider the current demand as ample to launch its own cryptocurrency, China is on the opposite shore. According to a recent report, the People’s Bank of China (PBC) could be closer than expected in this manner.
It outlined that the most-populated nation in the world has publicized five patents related to the upcoming CBDC. Moreover, the bank and the companies behind the project had completed the development processes and were now working on the proper legislation.
The Bank of International Settlements also believes that the world needs a digital currency now more than ever. In a recent document, it showcased that cash, credit card terminals, and PIN pads can help spread the novel coronavirus. As such, the report offered CBDCs as a possible solution as they will be entirely contactless and digital.