South Korea central bank to pilot ‘cash-free’ society with crypto

Since 2016, South Korea’s central bank, the Bank of Korea (BOK), has wanted to develop a cash-free society. Those plans may be one step closer, as the bank launching a pilot program that will explore the feasibility, and is considering cryptocurrency and blockchain technology to make it happen.

The project was published this week in a report by the BOK, according to Token Post. In the report, the bank’s “2017 Payment Report,” details the creation of an organization that will research cryptocurrency and analyze the effect it could have on the financial system. The bank further stated that it has already begun to investigate the use of blockchains for the cash-free system, including the use of the technology as a payment system.

The pilot program is designed to reduce the costs associated with printing and distributing physical money. According to officials, South Korea spent about $47 million issuing paper and coin currency in 2016 The country is pushing to be “cash-free” by 2020.

An added benefit that a cash-free program offers to the country is that it would include the “underground economy,” which is mostly cash driven. An analyst with the Shinhan Investment Corp. stated that, “[A cashless society] can open the underground economy, and thus enhance equivalence in taxation. The shoe box full of 50,000 won banknotes that you see in movies will disappear in reality (with the advancement of a cashless society).”

This is only the latest in a series of steps to move away from physical currency. In 2017, the BOK implemented a program that allows customers to deposit small change from transactions directly onto prepaid debit or phone cards.

If the new program functions as well as the bank hopes, it would be a significant step forward for global acceptance of cryptocurrencies. It could possibly push them into mainstream financial transactions, ultimately allowing digital currency to fulfill the role for which it has been designed.

South Korea isn’t the first country to consider a switch to cryptocurrencies. Sweden is running a program now that could see the country’s e-krona replace its fiat currency. That program could see cryptocurrency becoming the currency of choice in the country within the next four to five years.