Chang Yong Rhee, governor of the Bank of Korea (BoK) in a recent interview mentioned the bank’s ongoing experiment into digital currency, i.e. digital South Korean won.
The Bank of Korea has developed and tested a strategy that facilitates cross-border payments. The bank envisions easing the process by linking different central bank digital currencies (CBDC) from across the globe. Rhee also revealed that some decisions concerning the digital won calls for a trade-off.
To ensure efficiency and optimum innovation, the bank has been working on the digital South Korean won project for over 11 months now. In July, the bank announced the real test phase of the CBDC, wherein it was working with ten commercial banks. Under this project, the bank also tried testing the utility of CBDC to purchase non-fungible tokens (NFT).
The experiment concluded that a CBDC is capable of processing up to 2,000 transactions each second. Additionally, the distributed ledger technology, the technology underlying crypto currently does not have the scalability required for a retail CBDC. Hence it would be better to rather use the standard centralized ledger database.
With the advancing technology, many countries across the globe have shown positive signs toward CBDCs. The major economies including the United Kingdom, United States, European Union, Japan, Australia, etc. have been exploring and testing the issuance of CBDC whereas China has already carried out several trials as reported by Todayq. South Korea has been conducting its CBDC trials since last year and is expected to complete the first phase out of the two by January.
According to Rhee, the bank has recognized that there is nothing like perfect technology or a CBDC design that is equipped to satisfy all the existing goals and expectations. Currently, the bank is working to improve compliance at the sacrifice of privacy.
The bank has recently also launched a virtual money laundering and terrorism financing monitoring system and is working to facilitate the data submission process.