The central bank of South Korea has temporarily halted its digital currency testing, waiting for directions from the government regarding stablecoins.
Reasons for Postponing CBDC Testing
The Bank of Korea informed participating banks that the second phase of trials, originally planned for this year, was postponed. The central bank is awaiting how the government will continue to develop stablecoin concepts and how these initiatives may interact with the CBDC.
Discussion on Implementing Stablecoins
Newly elected President Lee Jae-myung has proposed legislative changes to allow for the issuance of stablecoins that track the value of the South Korean won. His party introduced a bill allowing companies to issue such tokens with a minimum capital of 500 million Korean won.
Bank Reactions to Project Changes
Banks involved in the testing expressed dissatisfaction with the high costs of the CBDC project and the lack of a clear commercialization plan. The straightforward and predictable steps for implementing stablecoins are attracting banks' interest, as they offer clearer financial benefits.
The decision to postpone CBDC testing is linked to the anticipation of further government steps regarding stablecoins, indicating a shift in bank interests towards a more predictable model.
