Task Force For Central Bank Digital Currency Research Formed In S.Korea

A new task force for central bank digital currency (CBDC) research has been formed in South Korea by the Bank of Korea (BOK) which is the central bank of the country. In a document titled “Monetary Policy for 2020” the bank briefly talked about the launch of the task force and said that it would continue to build on its existing research into distributed technology.

Published on December 27, the brief by BOK shows that the central bank plans to recruit even more experts in the field. As part of its new CBDC agenda, the institution also posted a job listing for digital currency experts – which came from a report from the Korea Times outlet.

Aside from the task force for central bank digital currency research, BOK also noted that it will actively engage in discussions with the Bank of International Settlements (BIS) and other relevant international entities. The goal is to keep abreast of CBDC development at other central banks.

Right now, the cryptocurrency news show that the bank plans to use BIS’ Principles for Financial Market Infrastructure (PFMI) and to enact assessment principles for improving its oversight of domestic financial systems.

As you may not know, the PFMI is a framework which was earlier established by the BIS for managing market risks including liquidity, credit, custody, settlement, operational as well as investment risks across payment systems. securities settlement systems, trade repositories and other infrastructures.

After examining the possible legal and social effectiveness of a project like CBDC, BOK noted that there was no reason for the bank to issue a CBDC that would be available for the wider public in the near future.

The task force for central bank digital currency (CBDC) research has broadly separated the study of the benefits of a “retail” or “general purpose” CBDC accessible to the general public from “wholesale” variants of CBDCs, which would be limited for use by financial institutions.

In the past, BIS warned that “a general purpose [retail] CBDC could give rise to higher instability of commercial bank deposit funding” and potentially fuel faster bank runs.

Meanwhile, other countries including France also plan to pilot a wholesale CBDC in 2020. According to the French central bank’s governor François Villeroy de Galhau, the plans are officialized and have been revealed this month.