30.06.2025 10:10

South Korea's central bank, the Bank of Korea (BOK), has unexpectedly halted its Central Bank Digital Currency (CBDC) project, shelving plans for a second round of testing. This decision follows significant pushback from participating commercial banks, who voiced concerns regarding the project's feasibility and economic viability.

The abrupt suspension of the CBDC initiative marks a significant strategic shift for South Korea's digital currency landscape. Instead of pursuing a state-backed digital currency, major players like KB Kookmin Bank and Shinhan Bank are now focusing their efforts on developing a Korean won stablecoin, a move seemingly encouraged by the government’s drive for increased private sector engagement in digital innovation. This pivot reflects a growing interest in stablecoins as a potentially more commercially viable alternative to CBDCs.

The BOK's spokesperson confirmed the pause in CBDC discussions, citing the banks' concerns over the high costs and limited commercial potential of the pilot program. The substantial financial investment in the initial stages of the CBDC project, coupled with the banks' preference for stablecoin development within the Open Blockchain and DIDIA initiatives, ultimately led to the decision to halt the project.

This reallocation of resources from the CBDC project to stablecoin development is expected to dramatically reshape the Korean digital currency market. An increase in the supply of bank-backed stablecoins is anticipated to significantly impact market liquidity. While some banks are still evaluating their involvement in the stablecoin initiative, the shift in focus represents a considerable departure from the initial CBDC ambitions, creating uncertainty and anticipation for the future of digital currencies in South Korea. The lack of official statements from the BOK leadership beyond the spokesperson's confirmation underscores the sensitive nature of the transition and the ongoing internal discussions among key stakeholders.