BOK Research Project "If BOK Issues CBDC, It Will Have Legal Tender Status"

[Asia Economy Reporter Kim Eunbyeol] A study has found that central bank digital currency (CBDC) can currently function as legal tender issued by the Bank of Korea.

According to the results of an external research project conducted by the Bank of Korea on the 8th under the theme "Legal Issues Related to CBDC and Directions for Enacting and Revising Laws," CBDC meets all the requirements of legal tender under the existing currency legal system and is therefore judged to hold the status of legal tender. Legal tender is characterized by the central bank's exclusive right to issue currency and its legal tender status.

The researchers in charge of the project, Professors Jeong Sunseop and Jeong Junhyeok of Seoul National University and Professor Lee Jonghyuk of Hanyang University, explained, "CBDC can be regarded as having the status of legal tender under the existing currency legal system," adding, "Since the Bank of Korea holds the exclusive right to issue currency, the issuance of CBDC also falls within the Bank of Korea's objectives and scope of work."

However, they pointed out, "The currency issued by the Bank of Korea refers to physical Bank of Korea notes (banknotes) and coins, so separate legal provisions for issuing CBDC need to be established." According to the study, since the Bank of Korea exclusively holds the right to issue currency, issuing CBDC, which is a form of electronic currency, falls within the Bank of Korea's objectives and scope of work. However, the currency issued here refers to Bank of Korea notes and coins, and it is difficult to interpret CBDC as included in this category, so separate legal provisions for issuing CBDC should be prepared.

They also added that since the "Act on Reporting and Using Specified Financial Transaction Information" broadly defines virtual assets regardless of the issuer, it is necessary to amend the Act to ensure that CBDC is not classified as a virtual asset.

They further noted that the CBDC system for issuance, distribution, and redemption corresponds to a payment system, so the Bank of Korea can operate the CBDC system according to the law and establish necessary regulations.

The research team stated, "The Bank of Korea's issuance of CBDC is based on its exclusive right to issue currency and is not for profit, so it is not subject to the Electronic Financial Transactions Act," adding, "It is also necessary to amend related laws to allow punishment for forgery and alteration of CBDC."

This content was produced with the assistance of AI translation services.