On March 26, 2019, South Korea’s central bank published 2018 Annual Payment Settlement Report. In the report, the country’s apex bank has given a summary of research it conducted on central bank digital currencies (CBDCs).
Promising Future for Crypto Assets
South Korea is one of the global hotbeds when it comes to cryptocurrencies. The peninsular country is arguably one of the leading crypto-friendly countries not only in Asia but in the world.
South Korea’s apex bank, the Bank of Korea, in its 2018 Annual Payment Settlement Report draws various interesting conclusions regarding CBDCs.
According to the report, the general sentiment among the Korean experts towards crypto assets is quite positive.
The report states that at present, instability and inefficiency are the Achilles Heels for cryptocurrencies. However, the report adds that according to Korean experts, crypto assets have a promising future in the country and could one day see widespread use.
In the report, the authors note that other than enabling transactions between large financial institutions and banks, CBDCs can be used to make micropayments too.
The document identified the ability to track transactions via distributed ledger technology (DLT) as one of the main advantages of CBDC. Further, the authors believe that blockchain-powered CBDCs are significantly more secure for the settlement of payments courtesy of the technology’s characteristic of immutability. This means that once a payment is made it cannot be canceled or altered in the future.
The report, however, notes that CBDCs might not necessarily reduce the time required for the transfer of funds.
Could CBDCs Replace Commercial Banks?
There have often been speculations about the way CBDCs could impact the functioning of a country at a macro-economic level.