The Central Bank of Korea will conduct a simulation experiment for digital currencies (CBDC) by the central bank in the second half of the year.
Central Bank of Korea to Set up Platform for CBDC
According to the information on its official website, the Bank of Korea will conduct a simulation experiment with its CBDC in the second half of 2021. This is a sign that another country has stepped up its efforts to test and launch CBDC.
South Korea has considered setting up a CBDC, and many officials have indicated that progress is being made. Bank of Korea Governor Lee Chongyeol stated in February 2021 that it was better to do things right than to do things quickly. At the same time, Shinhan Bank has set up a platform that can be used for CBDC.
Ju-yoel tends to be cautious, similar to the US. He also said China’s digital renminbi will not affect South Korea. Some analysts said China’s CBDC could dominate the global economy, but most countries have denied these claims.
CBDC is a Legal Tender and not a Virtual Currency
The Bank of Korea also made it clear earlier this year that CBDC is legal tender, not a virtual currency. In other words, CBDC is just a digital version of legal tender based on distributed ledger technology.
This was one of the main criticisms of CBDCs, that is, they also have the flaws of the fiat currency, but that hasn’t prevented R&D. CBDC projects in several countries are currently progressing smoothly and 2021 will be a milestone.
CBDC is working everywhere now
These countries include China, Russia and Japan, all of which are investing heavily in digitization. China has been a leader here so far, has carried out some pilot projects and has received great recognition. It is expected to be officially launched by the end of this year.
Most countries are still in the design phase and some other countries are experimenting. Only two countries in the Bahamas and Cambodia have officially started. Because of this, PwC recently named it the best CBDC in a report.
The advantages of a blockchain-based currency are obvious, but critics point out that it is still centralized. Hence, it is subject to all the pitfalls of a centralized system. However, this is still an important step towards mainstream adoption.