China Worries Driving South Korean Central Bank to CBDC Research

Bank CBDC South Korea

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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June 26, 2023 06:55 EDT

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The South Korean central bank is launching a second central bank digital currency (CBDC) team – a year after disbanding its first group of CBDC researchers.

The central Bank of Korea (BOK) announced its intentions to launch the new unit, which it says will conduct CBDC-related research, in what appears to be a direct response to China’s plans to issue a digital yuan.

Per media outlet E Daily, the BOK is still distancing itself from digital won issuance, stating,

“Just because we have launched a research team, it wouldn’t be correct to assume that a CBDC is about to be issued. We will be more interested in studying how other countries are pushing ahead with CBDCs.”

However, the move appears to be nothing short of a complete policy u-turn. Just under a year ago, the BOK claimed there was almost no chance of a South Korean CBDC seeing the light of day, giving this as its reasoning for dissolving its digital currency and cryptocurrency research task force team.

And as previously reported, the BOK certainly appears to have changed its tune in recent weeks on the issue of CBDCs, stating that it is now “in the process of looking into” possible CBDC issuance.

The BOK says its team of researchers will be small, with an initial eight members appointed, specializing in areas as varied as IT, human resources, economics and management.

Although the BOK made no direct of mention of China in its briefing to the media, E Today reporter Kim Hye-mi wrote,

“The People’s Bank of China’s aggressive bid to break ‘dollar dominance’ by using its own digital currency is thought to have led to the BOK’s change of heart.”

As reported, around 7 undisclosed central banks, representing 20% of the world’s population, are likely to launch CBDCs in 3 years, a new survey by the Bank for International Settlements, showed.