South Korea’s central bank, the Bank of Korea (BOK) has set up a legal advisory committee that will look into any possible regulatory roadblocks when issuing its planned central bank digital currency (CBDC).
Bank of Korea Continues to Forge Ahead With CBDC Plans
According to The Korea Times,onthe South Korea central bank set up a panel consisting of six members, which include experts in commercial law and fintech. The new advisory committee will begin work on June 15 and will continue until May 2021.
In a statement by the BOK regarding the function of the new six-member committee, the central bank said:
“We established the advisory group to discuss legal issues surrounding a CBDC and figure out which laws need to be revised or enacted for smooth progress in the BOK’s possible issuance of digital currency,”
Accroding to a report in April 2020, the BOK rolled out a pilot pilot program to study the various modalities for the launch of its planned CBDC project. Towards the end of 2019, the South Korean apex bank also set up a digital asset task force to investigate the potentials of a CBDC.
Although the BOK has stated that it is in no hurry to issue a digital won, the central bank is nonetheless actively carrying out various investigations. The apex bank recently revealed that it was conducting research on the CBDC adoption by other central banks and gathering information to help with its intending digital won project.
CBDCs See More Adoption From Central Banks
While South Korea is still at the research stage regarding its CBDC project, China is clearly ahead of the game, as reports revealed that the country could speed up its digital yuan issuance for COVID-19 stimulus package payments.
According to Global Times, China’s CBDC could come earlier than expected as inside sources say authorities are working to fast track the rollout of the DCEP project. Reports indicate that the decision to accelerate the issuance of the digital yuan is in response to trade tensions with the United States as well as the need for an efficient currency to be used in COVID-19 stimulus payments.
Commenting on the matter, Cao Yin, founder of Digital Renaissance Foundation an early blockchain proponent in China, remarked:
“Although the US hasn’t put Chinese financial firms and institutions onto its Entity List, the US may still pose widespread threats to Chinese institutions and impact the yuan’s standing in international settlement. In this regard, China’s state-run digital currency may be rolled out sooner than expected to counter a possible US block.”
Given the economic troubles caused by coronavirus lockdowns, China like many other nations is looking to stimulate a tangible recovery by improving its fiscal policies. These measures usually involving boosting small and medium enterprises as a way of aiding the real economy.
Elsewhere, the De Nederlandsche Bank (DNB), the Netherlands’ central bank, is also planning to launch its own CBDC. The country is also optimistic that it could play a leading role in CBDC development.
More countries continue to join the CBDC bandwagon, with an executive of the Bank of England rallying support for CBDC issuance. The Bank of International Settlements (BIS0 has also stated that the present coronavirus pandemic could accelerate CBDC adoption.accelerate. A report in May 2020, JP Morgan analysts stated that the popularity of CBDC projects could shake the U.S dollar’s hegemony.
The analysts said that there’s a “reasonable case” to be made for central banks around the world to introduce digital currencies. They, however, added that CBDCs are unlikely to have the transformative impact some have hoped.
Although the report doesn’t see CBDCs topple the strong influence help by the greenback anytime soon, it does, however, believe that digital currencies could impact the “most fragile” aspects of dollar dominance – including its use in trade settlement and the SWIFT messaging system.
The analysts added that CBDCs provide a tempting alternative to global powers including the European Union (EU) to lessen their dependency on USD. The report mentions the case of SWIFT suspending access for some Iranian banks in 2018 which could have technically been a violation of some EU laws.