South Korean Central Bank: Crypto And Blockchain To Provide Cash-Free Society

South Korea’s central bank, the Bank of Korea (BOK), has recently announced it is considering cryptocurrencies and blockchain applications for its project for a “cashless society,” local news TokenPost reports May 1.

South Korea's central bank says cryptocurrency and blockchain will allow societies to become coinless. The South Korean gov't has been trying to get rid of coins for a long time, many methods have been suggested but it wants to go with cryptocurrency.https://t.co/k8DNdinbl9

— Joseph Young (@iamjosephyoung) May 1, 2018

According to TokenPost, BOK announced the official launch of its cash-free society pilot in its “2017 Payment Report” yesterday. The report mentioned that the bank has started exploring possible uses of blockchain and cryptocurrency, such as applying blockchains and passwords to payments.

The bank has also established an organization for researching digital currency and analyzing possible effects of cryptographic money on the overall financial system.

The major goals of the project are customer convenience and reducing the cost of producing physical currency. In 2016, South Korea reportedly spent KRW 53.7 bln ($47 mln) on issuing physical currency.

The government also plans to use the initiative as a means by which to open the underground economy, which is mostly cash-driven. Kwak Hyun-soo, an analyst at Shinhan Investment Corp said:

"It can open the underground economy, and thus enhance equivalence in taxation. The shoe box full of 50,000 won banknotes that you see in movies will disappear in reality (with the advancement of a cashless society)."

According to KoreaTimes, the South Korean government began considering phasing out physical money in 2016, and planned to become a “cash-free society” by 2020. In April 2017, the BOK launched a coinless society trial, in which customers could deposit small change from transactions and put them on a prepaid or mobile card to use at convenience stores, discount stores, and department stores.

In January, inter-ministerial division on cryptocurrency policy confused the South Korean public when the Ministry of Justice independently declared it would ban cryptocurrency trading. Following a petition, the Minister of Finance said that the government would not ban crypto trading, which was eventually confirmed by the Minister of the Office for Government Policy Coordination in February.

Last week, Cointelegraph reported that South Korea’s largest crypto exchange Bithumb is pushing for the adoption of digital currencies in the country. The exchange aims to evolve into a bank-like business in order to make the use of cryptocurrency in daily life more intuitive.