South Korea’s central bank has decided to delay testing its central bank digital currency (CBDC), because the government is showing more support for stablecoins that are linked to the local currency.
On Sunday, the Bank of Korea told the banks involved in the CBDC testing that the next phase of testing, which was supposed to happen later this year, will be put on hold for now. This was reported by local media on Monday.
An official from one of the seven banks said the central bank wants to wait and see what the government’s plans are for stablecoins and how a CBDC would work alongside them.
South Korea’s new president, Lee Jae-myung, promised during his campaign to allow stablecoins, pegged to the Korean won, and made other crypto-related promises.
Banks frustrated by high costs of CBDC project
A senior banking official said the second part of South Korea’s CBDC trials was already “close to falling apart” because the seven banks involved were upset about the high costs.
The banks told the Bank of Korea that joining the trial was too expensive, and they were also unhappy that the central bank hadn’t shared a clear plan for how the CBDC would be launched to the public.
According to Yonhap, the Bank of Korea suggested pushing the second phase of testing from later this year to the first half of next year. It also might reduce the number of banks taking part.
In the first phase of testing, from April 1 to June 30, 100,000 people tried making payments using the CBDC. The second phase was meant to add more stores and test money transfers.
