A senior researcher from the Korea Institute of Finance (KIF) has recently called on the Bank of Korea (BOK) to explore the possibility of issuing digital tokens representing the Korean won using blockchain technology. Lee Dae-ki, a leading expert at KIF, urged the central bank to "seriously consider" this move, emphasizing that the adoption of digital currencies could bring significant benefits such as lower transaction costs, increased transparency, and more efficient payment systems.
In a report released last Sunday, Lee highlighted that blockchain-based distributed ledger technology could enhance cybersecurity for central banks and streamline interactions between financial institutions and consumers. He argued that these advantages could drive a "financial revolution," transforming how money is managed and exchanged in the modern economy.
However, he also warned that current digital tokens are not yet legally recognized in South Korea, which means the central bank is still far from launching a digital version of the won. Despite this, Lee believes the BOK is likely to move forward with issuing digital tokens in the near future, which could trigger widespread changes across the banking sector.
He explained that if the central bank introduces digital currency, traditional banks would need to compete more fiercely by offering better interest rates or additional services, ultimately benefiting consumers. This shift could reshape the entire financial landscape, pushing banks to adapt or risk becoming obsolete.
South Korea has become one of the largest cryptocurrency trading markets globally, but the government remains cautious. Authorities have banned initial coin offerings (ICOs), a popular method of raising funds through digital tokens, and have not officially recognized cryptocurrencies like Bitcoin as legal tender. Recently, major financial regulators in South Korea ruled out the possibility of regulating cryptocurrencies, further highlighting the uncertainty surrounding their legal status.
Despite this lack of formal recognition, the Korean Taxation Office is working on establishing a tax framework to impose capital gains taxes on cryptocurrency transactions. This suggests that while the government is not fully embracing digital currencies, it is beginning to acknowledge their economic significance.
Lee pointed out that the difficulty in defining cryptocurrencies—whether as conventional currency, commodities, or something else—has created regulatory challenges. Different countries classify digital assets in various ways, adding to the complexity of global oversight.
Interestingly, just weeks before Lee’s comments, a Chinese counterpart made similar calls, urging the People's Bank of China to issue its own digital currency as soon as possible. In fact, the PBOC had already conducted successful blockchain-based digital currency trials a year ago, making it one of the first central banks to experiment with this technology.
This article reflects the personal views of the author and does not represent the official stance of any organization. It is intended for informational purposes only and should not be considered financial advice.
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