South Korea, a country known for its rapid technological advancements, is stepping into the sphere of digital currencies. The Bank of Korea is considering the cities of Jeju, Busan and Incheon for the piloting of its Central Bank Digital Currency (CBDC). Significantly, South Korea’s capital, Seoul, finds no place in this list.
The CBDC pilot aims to test the feasibility and practicality of issuing and distributing the digital currency in a controlled environment. This move positions itself as an evolutionary step from its local currency scheme that was introduced during the pandemic for income and relief payment solutions.
These three cities already issue and circulate their unique local currencies – ‘Tamranjeon’ in Jeju, ‘Dongbaekjeon’ in Busan, and ‘Incheon e-Eum’ in Incheon. This readily available infrastructure lends itself beneficially to the CBDC pilot. However, the CBDC platform may find itself grappling with “technical barriers” that are absent in the local currency scheme.
While Jeju seems to be the most plausible choice for the pilot owing to its large, yet manageable population size, things aren’t all sunny. An objection on behalf of Busan states that the scale of eligible citizens in Busan is overwhelming, and could burden the Bank of Korea’s efforts.
Simultaneously, the upcoming CBDC needs to secure franchises that can facilitate CBDC payments. It’s a puzzle to understand whether the currency would be largely local, catering only to residents, or extend to non-residents, such as tourists.
Interestingly, multiple banks in South Korea concurrently research stablecoins as potential alternatives to CBDCs, focusing on the ease and efficiency of transactions. This may put into question the very necessity of a CBDC amidst the presence of an equally capable contender, the stablecoin.Bitcoin, currently valued at $29,349, only adds to the increased uncertainty regarding the future choice of digital currency in South Korea.
In conclusion, South Korea’s step towards a CBDC marks a crucial turning point in the country’s monetary landscape. The chosen city will serve as a petri dish to explore the opportunities and challenges of a CBDC. The results will certainly impact future discussions regarding widespread CBDC adoption, not only in South Korea but also in other technologically progressive nations. Therefore, it’s a move that deserves close and critical attention from the global crypto community.
Source: Cointelegraph
