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Bank of Korea reports on how central banks around the world are approaching CBDC.

The Bank of Korea (BOK) has completed its first phase of a two-step mock test of the feasibility of its central bank digital
The Bank of Korea (BOK) has completed its first phase of a two-step mock test of the feasibility of its central bank digital currency (CBDC).

According to a report published by the Bank of Korea, central banks are increasingly considering launching digital currencies, as advances in blockchain and payment technology make it increasingly more feasible. The report builds on the bank’s research into central bank digital currencies around the world, which examined progress at some 14 central banks known to be researching or developing their own national digital currencies. China is all set to become the first major nation to issue a national digital currency.

The ongoing decline in cash has forced banks to consider digital currencies.

According to Bank of Korea’s overseas CBDC progress report, the bank noted that developments in payment settlements, coupled with the ongoing decline of cash, are pushing central banks towards taking a more serious look at digital currencies. Several countries have been working for quite some time on the issuance of centralized digital currencies.

The Bank of Korea’s report says that several banks are already working on IT systems that would rely on blockchain technology to distribute and record digital currency transactions. Sweden, Singapore, Canada, Japan, Thailand, and Hong Kong are among the countries that are discussing distributed ledger technology in their developing models for digital assets.

Central banks are looking for types of digital currencies.

The report says central banks are currently divided into two camps: those looking at CBDCs for everyday transactions, small retail sales, and digital currencies for larger transactions such as commercial settlements. The report further underlines the progress being made by central banks towards launching their own digital currencies, which is expected to give birth to a new era of mainstream adoption of blockchain technology for payments worldwide. However, Russian President Vladimir Putin thinks differently. He said that it is not possible for countries to have their own digital currencies as these forms of currencies work beyond borders.