China is a leader in the development of a Central Bank Digital Currency. Their advancement in this area has prompted other nations in the SE Asia region to consider issuing their own. The fear is that if China issues a CBDC, it could offer the economy a competitive advantage that leaves them behind.
Japan is one of the nations that are considering issuing a CBDC because of China. South Korea is one of the nations in the region that has taken concrete steps to issue a CBDC. According to a recent local media report, the nation’s central bank recently created a legal advisory committee for a CBDC.
About the Legal Panel
According to the media report, the panel will consist of six experts drawn from the IT and finance industries. They include lawyers in the FinTech sector and professors from top South Korean universities that teach commercial law. There is also a member from the central bank’s legal policy office. The announcement by the bank follows the launch of a CBDC pilot in April that will last for 22 months.
A Bank of Korea official said that they had established the panel to look into legal issues around the issuance of a CBDC. He said the panel would look into which laws would need to be enacted and which ones would need to be updated for the issuance of a CBDC by the central bank.
The panel will be around until May 2021 and it could help South Korea establish a roadmap for the issuance of a CBDC. It is going to operate within the 22 months established for the pilot CBDC program.
CBDC Part of Long Term Policy
The central bank recently released a long-term policy strategy called BOK 2030 during its 70th-anniversary celebrations. According to the policy strategy, the bank would take full advantage of emerging digital technologies such as big data, AI, and the blockchain. Additionally, they will intensify research into a CBDC.
It plans to speed up the adoption of digital innovating by intensifying research into related technologies and incorporating the results into policies. As part of the pivot towards emerging technologies, the bank is going to establish a digital innovation division by the end of 2020. Additionally, the BOK will establish an official with deputy-governor ranking to head the unit as the chief digital strategy officer.
In the long-term policy strategy, the bank noted that various central banks globally were looking into the issuance of a CBDC. However, the policy strategy did not confirm whether they would issue a CBDC, although they will continue mapping detailed action plans for potentially issuing one. The bank believes that it would allow them to proactively deal with future changes to the payment market.
The bank of Korea is determined not to be left behind if the global economic system moves towards CBDCs. Major central banks such as China and some in Europe are intensifying research into a CBDC. China will likely be the first to issue a national CBDC. Once that happens, it could set off a domino effect where almost all central banks globally issue a CBDC.
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