BANK OF KOREA PUBLISHES BOOK ON CENTRAL BANK DIGITAL CURRENCYS LEGAL ISSUES

Last updated: June 19, 2025, 18:41 | Written by: Gavin Wood

The future of finance is rapidly evolving, and central banks around the globe are actively exploring the potential of Central Bank Digital Currencies (CBDCs).South Korea is at the forefront of these explorations.The Bank of Korea (BOK) has recently published a comprehensive book delving into the complex legal landscape surrounding the implementation of a future CBDC.This isn't just an academic exercise; it's a critical step towards ensuring the smooth operation and practical usefulness of a digital won.Think of it as laying the legal groundwork for a new era of money.This proactive approach demonstrates the BOK's commitment to understanding and addressing the potential challenges and opportunities presented by digital currencies.This isn't just about technology; it's about ensuring the safety, efficiency, and stability of the South Korean financial system in the face of rapid digital transformation.The book highlights the significant legislative amendments that may be required to create a supportive environment for a sovereign digital currency, positioning South Korea to be a leader in the digital finance space. South Korea's central bank has issue a book on legal matters that would need to be addressed to ensure the smooth operations and usefulness of a future central bank digital currency. 8326 Total viewsIt also underscores the seriousness with which the BOK is approaching its CBDC research and development, signaling a potential shift in how Koreans interact with their national currency in the years to come.The book, co-authored by a team of legal experts and academics, explores diverse perspectives on how a potential CBDC could address future challenges arising from the economy’s swift digital transformation.

Understanding the Need for CBDCs: The Bank of Korea's Perspective

Why is the Bank of Korea even considering a CBDC? The Bank of Korea is taking a holistic look at the changes that would need to be made to accommodate a CBDC rollout Please note, this is a STATIC archive of website cointelegraph.com from, cach3.com does not collect or store any user information, there is no phishing involved.Understanding the rationale behind this exploration is crucial. Bank of Korea publishes book on central bank digital currency's legal issuesWhile the BOK currently doesn't see an *urgent* need for a CBDC, primarily because of the already high levels of digital payment adoption in South Korea, they acknowledge the potential future benefits and challenges that warrant careful consideration. Last fall, the Bank of Korea announced it would be testing the distribution of a central bank digital currency in 2025. Preparations appear to be going ahead on multiple fronts, with the bank s publication of a new book today dedicated to the legal questions raised by the potential issuance of such a currency.Their research aims to proactively address these issues.

Maintaining Monetary Sovereignty: In a world where private digital currencies are gaining traction, a CBDC can help maintain the central bank's control over monetary policy and the financial system.
Improving Payment Efficiency: A CBDC could potentially streamline payment processes, reduce transaction costs, and increase financial inclusion, particularly for underserved populations.
Addressing the Decline of Cash: As the use of physical cash declines, a CBDC could provide a digital form of central bank money, ensuring continued access to risk-free and universally accepted payment options.
Countering the Rise of Cryptocurrencies: A CBDC could provide a safer and more stable alternative to privately issued cryptocurrencies, mitigating potential risks to financial stability and consumer protection.

The BOK recognizes the potential impact of rapid digital transformation and believes that a well-designed CBDC could play a crucial role in adapting to these changes and safeguarding the future of the Korean financial system. Bank of Korea publishes book on central bank digital currency s legal issues Febru South Korea s central bank has issue a book on legal matters that would need to be addressed to ensure the smooth operations and usefulness of a future central bank digital currency.This forward-thinking approach sets the stage for a more resilient and innovative financial landscape.

Key Legal Challenges Addressed in the BOK's CBDC Book

The Bank of Korea's book doesn't shy away from the complexities of implementing a CBDC. BOK Publishes CBDC Book. According to the English service of South Korean media outlet Arirang, the Bank of Korea (BOK) has published a book detailing the legal issues associated with CBDCs. As part of the book, the country s central bank argued for significant legislative amendments that will create an enabling environment for sovereignIt meticulously examines the various legal challenges that need to be addressed to ensure its successful rollout.Let's delve into some of these crucial aspects:

Legal Tender Status and Regulatory Framework

One of the fundamental questions is the legal status of a CBDC. Bank of Korea publishes book on central bank digital currency's legal issues South Korea's central bank has issue a book on legal matters that wouldShould it be declared legal tender, like physical cash?This designation would have significant implications for its acceptance and use. central bank digital currency (CBDC) research, and explain our perspectives on how our potential CBDC could help address future challenges posed by rapid digital transformation of the economy. Section 1 assesses whether we need to introduce CBDC in Korea. Currently, the BOK doesn t see an need to issue CBDCurgent, since, in Korea, bank accountThe BOK argues that a CBDC should be legally recognized as a fiat currency under the central bank's jurisdiction.

This recognition necessitates a comprehensive regulatory framework covering aspects such as:

Issuance and Distribution: Defining the legal basis for the BOK to issue and distribute the CBDC.
Data Privacy: Establishing clear rules for the collection, use, and protection of user data associated with the CBDC.
Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF): Implementing measures to prevent the use of the CBDC for illicit activities.
Consumer Protection: Ensuring adequate protections for users of the CBDC, including dispute resolution mechanisms and redress procedures.
Cybersecurity: Safeguarding the CBDC infrastructure against cyber threats and ensuring the integrity of the system.

Furthermore, the regulatory framework must address the relationship between the CBDC and existing financial institutions.Will commercial banks act as intermediaries for CBDC distribution? Central banks, too, are considering issuing their own digital currencies. A central bank digital currency (CBDC) is a central bank liability that is digitally created and recorded on cen-tralized or decentralized ledgers, denominated in an existing unit of account, and convertible in physical cash, commer-How will the CBDC impact their business models?These are critical questions that need careful consideration.

Jurisdictional Issues and Cross-Border Payments

In an increasingly interconnected world, the legal challenges surrounding cross-border CBDC payments are significant. Skip to main content Bitcoin Insider. MenuDetermining the applicable laws and regulations for transactions involving CBDCs issued by different central banks is a complex undertaking.

The BOK's book likely explores issues such as:

Conflict of Laws: Resolving conflicts of laws that may arise when different jurisdictions have conflicting regulations on CBDCs.
International Cooperation: Fostering cooperation among central banks to develop common standards and protocols for cross-border CBDC payments.
AML/CTF Compliance: Ensuring compliance with AML/CTF regulations in all jurisdictions involved in a cross-border CBDC transaction.
Data Transfer: Addressing the legal requirements for transferring user data across borders in connection with CBDC payments.

Addressing these jurisdictional issues is essential to facilitate seamless and secure cross-border CBDC transactions, promoting international trade and financial integration.

Impact on Existing Financial Institutions and Payment Systems

The introduction of a CBDC has the potential to significantly impact existing financial institutions and payment systems.The BOK's book likely analyzes the potential disruptions and opportunities that a CBDC could create.

Key considerations include:

Disintermediation: The potential for a CBDC to disintermediate commercial banks by allowing individuals and businesses to hold accounts directly with the central bank.
Competition: The impact of a CBDC on competition in the payment industry, particularly from private payment providers.
Financial Stability: The potential impact of a CBDC on financial stability, including the risk of bank runs and the impact on deposit rates.
Monetary Policy: The potential for a CBDC to enhance the effectiveness of monetary policy by providing the central bank with new tools to influence interest rates and credit conditions.

The BOK needs to carefully consider these potential impacts and develop appropriate policies and regulations to mitigate risks and maximize the benefits of a CBDC for the entire financial ecosystem.

The Bank of Korea's CBDC Pilot Program and Future Plans

The publication of this book is not the only sign that the Bank of Korea is serious about CBDCs. A central bank digital currency (CBDC) is legally a fiat currency and should be under the central bank s jurisdiction, says a report published by the Bank of Korea on February 8. The report, co-authored by group of professors from Seoul National University and Hanyang University, says South Korea would need to establish new laws for the BoKThe BOK has also announced plans to test the distribution of a CBDC in 2025. 9 Bossu, W, et al Legal Aspects of Central Bank Digital Currency: Central Bank and Monetary Law Considerations WP/20/254, IMF Working Paper November 2025. 10 Lastra, R Monetary Law, chapter 1. 11This pilot program is a crucial step in evaluating the practical feasibility and potential benefits of a digital won.

Testing Distribution and Functionality

The pilot program will likely focus on testing various aspects of the CBDC, including:

Technical Infrastructure: Evaluating the performance and scalability of the underlying technology platform.
User Experience: Assessing the ease of use and user acceptance of the CBDC.
Security: Testing the security of the CBDC system against cyber threats.
Payment Functionality: Evaluating the ability of the CBDC to support various payment use cases, such as retail transactions, peer-to-peer payments, and cross-border payments.
Offline Functionality: Some CBDC designs include offline payment capabilities, which would be crucial for ensuring access to digital currency in areas with limited internet connectivity.

The results of the pilot program will provide valuable insights for the BOK to refine its CBDC design and implementation strategy.

Collaboration and Innovation

The Bank of Korea recognizes the importance of collaboration and innovation in developing a successful CBDC.They are actively engaging with other central banks, technology providers, and financial institutions to share knowledge and explore potential partnerships.

This collaborative approach will help the BOK to:

Leverage Expertise: Benefit from the expertise and experience of other organizations in the field of CBDCs.
Promote Interoperability: Develop a CBDC that is interoperable with other payment systems, both domestic and international.
Foster Innovation: Encourage innovation in the development of new CBDC-based applications and services.

By fostering a culture of collaboration and innovation, the BOK aims to create a CBDC that is not only technologically advanced but also meets the evolving needs of the Korean economy.

CBDCs vs.Cryptocurrencies: Understanding the Key Differences

It's important to distinguish between CBDCs and cryptocurrencies like Bitcoin. Central Bank Digital Currency. In all countries, central bank-issued currency is the basic means of payment and settlement for economic agents, including individuals, firms, and financial institutions. Central banks are responsible for using this central bank money to maintain the safety and efficiency of the payment and settlement systems.While both are digital forms of currency, they differ significantly in their underlying technology, governance, and purpose. Octo - Central banks around the world, most notably in China, the United States and United Kingdom, are actively considering whether to adopt or create their own Central Bank DigitalThe Bank of Korea's exploration of CBDCs is not an endorsement of decentralized cryptocurrencies.

Centralized vs. The digital currency being developed by the People s Bank of China appears to be an account-based system, though details remain confidential. Cf. Douglas W. Arner et al, After Libra, Digital Yuan and COVID-19: Central Bank Digital Currencies and the New World of Money and Payment Systems, 65 EUR.Decentralized Control

The most fundamental difference is that CBDCs are centralized, meaning they are issued and controlled by a central bank.In contrast, cryptocurrencies are typically decentralized, meaning they are not controlled by any single entity.

CBDCs: Issued and regulated by a central bank, providing stability and trust backed by the government.
Cryptocurrencies: Operate on a decentralized blockchain network, offering potential for greater autonomy and censorship resistance but also higher volatility and regulatory uncertainty.

Stability and Volatility

CBDCs are designed to be stable in value, as they are pegged to the national currency.Cryptocurrencies, on the other hand, are often highly volatile, making them unsuitable for everyday transactions.

Regulatory Oversight

CBDCs are subject to regulatory oversight by the central bank and other government agencies.Cryptocurrencies, in many jurisdictions, operate in a regulatory gray area, raising concerns about money laundering, tax evasion, and consumer protection.

Potential Benefits and Risks

The benefits and risks of CBDCs and cryptocurrencies also differ significantly.CBDCs offer the potential for greater efficiency, financial inclusion, and monetary policy effectiveness.However, they also raise concerns about data privacy and government surveillance. Welcome! Log into your account. your username. your passwordCryptocurrencies offer the potential for greater financial freedom and innovation.However, they also pose risks related to volatility, security, and regulatory uncertainty.

Implications for South Korea's Financial Future

The Bank of Korea's research and development of a CBDC have far-reaching implications for South Korea's financial future.A successful CBDC implementation could transform the way Koreans interact with money, creating a more efficient, inclusive, and resilient financial system.

Enhanced Financial Inclusion

A CBDC could potentially expand financial inclusion by providing access to digital payments for underserved populations, such as those without bank accounts.This could be particularly beneficial in rural areas or for low-income individuals.

Increased Payment Efficiency

A CBDC could streamline payment processes and reduce transaction costs, benefiting businesses and consumers alike.This could lead to greater economic efficiency and competitiveness.

Improved Monetary Policy Effectiveness

A CBDC could provide the Bank of Korea with new tools to implement monetary policy, potentially leading to more effective management of inflation and economic growth.

A More Resilient Financial System

A CBDC could enhance the resilience of the financial system by providing a backup payment system in the event of disruptions to existing infrastructure, such as natural disasters or cyberattacks.

The Global CBDC Landscape: South Korea's Position

South Korea is not alone in exploring the potential of CBDCs. South Korea s central bank has published a book on legal matters. However, this would need to be addressed to ensure the smooth operations of a future central bank digital currency (CBDC). South Korea s Central Bank Issued a Book on Legal Matters . Bank of Korea recently announced it would be testing the distribution of a CBDC in 2025.Central banks around the world are actively researching and experimenting with digital currencies. South Korea's central bank has issue a book on legal matters that would need to be addressed to ensure the smooth operations and usefulness of a future central bank digital currencyThe Bank of Korea's efforts are part of a global trend towards the digitization of money.

China's Digital Yuan

China is one of the most advanced countries in terms of CBDC development.The People's Bank of China (PBOC) has been piloting its digital yuan, also known as e-CNY, in several cities and is planning to expand its use in the future. Last week, the IMF s Legal Department released a Working Paper on the legal aspects of central bank digital currencies (CBDCs), focusing specifically on central bank laws and monetary laws. The authors raised many interesting questions, such as whether central banks should be granted a monopoly for CBDC issuance or whether token-based CBDCsThe digital yuan is primarily an account-based system, though details remain confidential.

The United States and the Digital Dollar

The United States is also actively exploring the possibility of a digital dollar. South Korea's central bank has issue a book on legal matters that would need to be addressed to ensure the smooth operations and usefulness of a future central bank digital currency. Last fall, the Bank of Korea announced it would be testing the distribution of a central bank digital currency in 2025. Preparations appear to be MoreThe Federal Reserve has published several research papers on the topic and is conducting experiments to assess the potential benefits and risks of a CBDC.

Other Countries Exploring CBDCs

Other countries that are actively exploring CBDCs include:

The European Union: The European Central Bank (ECB) is investigating the possibility of a digital euro.
The United Kingdom: The Bank of England is also exploring the potential of a CBDC.
Canada: The Bank of Canada is researching the potential benefits and risks of a digital Canadian dollar.
Sweden: The Riksbank is piloting an e-krona.

South Korea's Bank of Korea is positioned well to learn from these global efforts and implement best practices as they develop their own CBDC.

Conclusion: Key Takeaways and Future Outlook

The Bank of Korea's publication of a book on the legal issues surrounding CBDCs is a significant step towards realizing the potential of a digital won.This proactive approach demonstrates the BOK's commitment to understanding and addressing the complex challenges and opportunities presented by digital currencies. Last fall, the Bank of Korea announced it would be testing the distribution of a central bank digital currency in 2025. Preparations appear to be going ahead on multiple fronts, with the bank s publication of a new book today dedicated to the legal questions raised by the potential issuance of such a currency. According to a summaryThe book highlights the importance of establishing a clear legal framework, addressing jurisdictional issues, and carefully considering the impact on existing financial institutions.

Key takeaways from the BOK's efforts include:

CBDCs require a robust legal framework: Clear laws and regulations are essential to ensure the smooth operation and public acceptance of a CBDC.
International cooperation is crucial: Collaboration among central banks is necessary to facilitate cross-border CBDC payments.
The impact on the financial system must be carefully considered: The introduction of a CBDC could significantly impact existing financial institutions and payment systems.
South Korea is actively preparing for a digital future: The BOK's research and development efforts position South Korea to be a leader in the digital finance space.

As the world continues to move towards a more digital future, the Bank of Korea's efforts to explore and develop a CBDC are essential for ensuring the stability, efficiency, and inclusivity of the South Korean financial system. BOK launches digital currency pilot for real-world use. Published : Ma - Updated : Ma -The upcoming CBDC pilot program in 2025 will provide valuable insights into the practical feasibility of a digital won.The Bank of Korea is taking a holistic look at the changes that would need to be made to accommodate a CBDC rollout.

The Bank of Korea's work paves the way for a future where digital currency can be a powerful tool for economic growth and social progress.Keep an eye on South Korea, as they could be at the forefront of the next revolution in finance.

Are you interested in learning more about the future of digital currency?Stay informed about the latest developments from the Bank of Korea and other central banks around the world.The future of money is being written now!