Photo source:Bank for International settlements

In a policy report of the Bank of Korea, it has been alarmed that the introduction of digital currency backed by the central bank may possibly would minimize the liquidity and bring increments in the interest rates. Furthermore, the report says that), financial stability could be hindered if central bank digital currency(CBDC) is authorized by the concerned governments.

It should be noted here that there was a wide-ranging debate about the issuance of the new form of digital currency with the authorization of central bank money and it had the potential impact on payment systems and the regulation of monetary policy. Countries like Sweden, Venezuela, Senegal, Tunisia, and the Marshall Islands have remained euphoric about CBDC.

However, BOK conducted numerous in depth studies on digital currency for a long time and according to the recent outcome as conclusion, it has decided to close its study with this finding and prediction. BOK has also decided to stop the issue of authorizing the digital currency.

With the introduction of bitcoin , the world has seen a drastic change of perception about decentralizing the payment systems and financial services and eradicating the mediary institutions. Nevertheless, the national governments have also been closely observing the possibility of digital currency and its influence on the domestic economy and the treasury. The BOK report has definitely raised concerns in the blockchain and cryptocurrency ecosystem and experts are trying to propose measures in this regard.