Bank of Korea: Central Bank’s Cryptocurrency is Moral Hazard
June 19, 2018
Central Bank of South Korea (BoK) has declared, it does not plan to start its own cryptocurrency due to risks that it may destabilize economy.
Issuing Central Bank Digital Currency (CBDC) may turn to be a moral hazard affecting money and credit policy and causing instability on the market.
In its latest report the BoK also stated, digital money does not actually function as money.
Although the Bank decided to study options to apply digital currencies, it yet declared:
“… our thoughts are that digital currencies have been exposed to various categories of risk associated with credit, liquidity and legal management,” a BoK economist Kwon Oh-ik said.
The authors of the document also recommend regulating private emission of digital currencies and add, the government has to impose tax on eminents for them to have fewer chances to boost prices for their assets.
“Technology improvements don't mean private sectors will be allowed to have the rights for money issuance. If this happens, the BoK should regulate them but properly,” Kwon said.