The Central Bank of South Korea has reportedly postponed the tests of a digital currency from the Central Bank (CBDC), as the country’s government has been increasingly supporting local currency support.
On Sunday, the Bank of Korea told the banks participating in the CBDC tests which had started in April that it temporarily suspended and postponing the second round of testing later this year, the local media of the Yonhap news agency and the Chosun Daily reported on Monday.
A senior official of one of the seven banks participating in the tests told Yonhap that the Central Bank was waiting to see the government’s plans for Stablecoins and how a CBDC would adapt to such tokens.
The newly elected president Lee Jae-Myung has campaigned on a list of crypto promises, in particular by allowing the issuance of stablescoins, cryptographic tokens that follow the price of currencies such as the Korean Won.
His party presented a bill earlier this month which would allow companies to issue such tokens with a minimum capital of 500 million Korean won ($ 370,000).
Disgruntled banks of the costly CBDC project
A senior banking official said that the second part of the CBDC tests was already “about to collapse” while the seven participating banks are not satisfied with the cost of participation.
The participating banks would have declared to the Bank of Korea that the trial was too expensive and was unhappy that the central bank did not specify a marketing plan for the CBDC.
The Bank of Korea floated by moving the second half of the tests of the latest this year in the first half of next year and could limit the number of financial institutions participating, said a senior banking official in Yonhap.
The first step in CBDC tests involved 100,000 participants testing payments using the currency issued by the Central Bank, which took place from April 1 to June 30 and the second stage would increase the number of merchants and bring funds.
Korean banks want stablecoins
The banks would have wanted to focus on issuing their own stablecoins, apparently that there is a clearer route to benefit financially from these tokens.
On Wednesday, it was reported that eight South Korean banks would associate to launch a stablecoin to support by next year.
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Half of the banks that gathered for Stablecoin – KB Kookmin, Shinhan, Woori and Nongghyup – also participated in the first stage of the CBDC.
South Korean fintech stocks see open mixed
The actions of certain South Korean fintech companies fell on Monday after the news of the CBDC suspension and the banks’ desire to focus on stablecoins.
The shares of the Kakaopay Corp mobile payment application fell 7% at 2 p.m., while the Hecto Financial payment company fell by around 5%.
KB Financial Group, the parent company of KB Kookmin, saw a bump of 0.8%, while Shinhan has increased by 1.6% so far.
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