Many believe that China’s digital fiat will arrive soon, but South Korea, one of the Middle Kingdom’s closest neighbors, has all but ruled out issuing its own digital token – and states that digital fiats are still a way off. In the private sector, though, the pace of banking innovation just continues to intensify.
The Bank of Korea (BoK) has stated that there is “almost no need for a digital fiat in South Korea.”
Per Newsis, the head of the BoK’s financial service department Hong Kyung-sik echoed views expressed by other international regulatory bodies who say that central bank digital currencies (CBDCs) would be most effective in developing nations – and have no place in advanced economies.
“Major countries are talking about CBDC issuance in the wake of Facebook’s Libra announcement, but it is unlikely that cash will completely disappear in the near future, and the possibility of CBDCs being issued soon is very slim indeed.”
He also stressed that South Korea has an advanced payment and settlement infrastructure, including financial settlement networks and credit card providers: "We also have a wide variety of payment methods available. As such, there’s little need to issue a CBDC."
But the South Korean private sector appears to be in much more of a hurry to adopt blockchain-powered solutions in the banking industry.
One of the country’s biggest telecoms giants, KT, says it has created a blockchain technology and smart contract-powered solution for automated currency exchange tellers, in conjunction with a leading commercial bank, IBK. Automated currency exchange machine operator Bellsoft is also participating in the project.
According to Decenter, the parties want to roll out the machines next year, and will look to install them in subway stations, hotels and shopping malls across the country. KT and Bellsoft say they are hopeful other banks will join the initiative.
KT says the devices will offer “preferential exchange rates,” and will provide 24-hour service.