The Bank of Korea is facing an important decision regarding the issuance of a central bank digital currency (CBDC). Governor Lee Chang-yong, in his speech at the “2023 MOEF-BOK-FSC-IMF International Conference on Digital Money,” emphasized the urgency and importance of taking action on CBDCs. He stated that CBDCs have become imperative and can no longer be postponed. While acknowledging the complex process involved in developing a CBDC, Chang-yong highlighted the need to address this issue promptly.
Chang-yong expressed concerns about the growing popularity of stablecoins and their impact on the stability of the financial system. He emphasized that if stablecoins become a widely accepted digital payment method, there is a potential risk that the system may not operate stably. This statement sheds light on the urgency of exploring CBDCs as a research project and developing a comprehensive strategy to navigate the evolving digital money landscape.
The Rise of Digital Money
In recent years, there has been a significant growth in the use of digital money. This trend has prompted the Korean Ministry of Economy and Finance, the Bank of Korea, the Korean Financial Services Commission, and the International Monetary Fund to organize the 2023 MOEF-BOK-FSC-IMF International Conference on Digital Money. This conference aimed to provide a platform for policymakers, academics, and market participants from around the world to discuss the opportunities and challenges associated with digital money.
Kim So-young, the Vice Chairman of the Financial Services Commission, highlighted the necessity of finding a balance between investor protection and innovation. Speaking at the same conference, she acknowledged the importance of regulations that ensure investor protection while fostering innovation. South Korea has taken steps in this direction by enacting legislation to regulate virtual assets, with the regulations set to take effect in July 2024.
The urgency surrounding central bank digital currencies is evident. Governor Lee Chang-yong’s call to action emphasizes the need for prompt exploration and development of CBDCs. The rise of stablecoins and the growth of digital money highlight the need to address these challenges and navigate the changing financial landscape. As South Korea prepares to implement regulations for virtual assets, there is an opportunity to strike a balance between investor protection and innovation. The global discussion at the “2023 MOEF-BOK-FSC-IMF International Conference on Digital Money” serves as a significant step towards finding solutions and shaping the future of digital currencies.
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