“When the Bank of Korea CBDC is introduced, it must be given the same status as a bank note”

Central Bank CBDC-related legal issues and legislation enactment and amendment direction book published
Cover seat of the Bank of Korea in Jung-gu, Seoul. [Photo: Reporter Minkyung Shin]
Cover seat of the Bank of Korea in Jung-gu, Seoul. [Photo: Reporter Minkyung Shin]

[Digital Today Reporter Kang Jin-gyu] A study has shown that in order for the Bank of Korea to introduce central bank digital currency (CBDC), the CBDC must be given the same status as the Bank of Korea.

The Bank of Korea announced on the 8th that it has published a booklet that contains the results of external research services related to CBDC,’Central Bank Digital Currency (CBDC) Legal Issues and Directions for Enactment and Revision of Laws’.

This study was conducted to review legal issues related to CBDC as an external research service, and to present the direction of enactment and amendment of related laws such as the Bank of Korea Act. The research was attended by Professor Soon-seop Jeong, Professor of Law School of Seoul National University, Professor Jong-hyuk Lee, Professor of Hanyang University, and Professor Jun-hyuk Jeong of Seoul National University.

In its conclusion, the report pointed out that “CBDC should have the same status as the current banknotes and coins in issuing power and compulsory currency as legal currency.” In order to grant CBDC status as a legal currency, it is necessary to set the basis for issuance of CBDC in the Bank of Korea Act, and to comply with the regulations applicable to the banking notes and coins of Korea. The report stated that various virtual assets issued by institutions other than the Bank of Korea cannot be classified as CBDC regardless of their name.

In addition, in order to ensure that CBDC is circulated as legal currency in the market and not used for illegal financial purposes, the transfer of CBDC is clearly stipulated in laws, and civil and criminal enforcement systems such as seizure, forced execution, and confiscation are not disruptive to CBDC. It stated that it is important to design the CBDC system to be applied. From the time of CBDC design, the system should be established in consideration of these points.

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The report has a positive effect in that CBDC allows people who do not have a bank account or credit card to use related services, but it is prudent in that users who are vulnerable to the digital environment cannot use payment instruments and thus may be excluded from economic activities. Insisted that access was necessary. Therefore, it is necessary to consider ensuring the right to use cash or allowing a real-based token-type CBDC within a limited range, such as when necessary in everyday life or in an emergency situation.

The report noted that special legislation may be needed to introduce CBDC. The report explained that while the basic provisions for issuance of CBDC should be stipulated in the Bank of Korea Law, it would be difficult to stipulate in the Bank of Korea Law all of the rules for ensuring specific issuance method, enforcement, transfer, and other judicial effect. Accordingly, it was revealed that it is possible to consider enacting and reorganizing special laws for matters required for issuance and transfer of CBDC.

Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at blockreview.net. Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.