South Korea’s central bank, the Bank of Korea (BOK), has produced an unexpectedly crypto-friendly assessment on the role crypto may play in the nation’s economy in the future – and questions whether bitcoin (BTC) and altcoins will “replace legal currencies” in the years ahead.
There were also some encouraging remarks for stablecoin developers and supporters of decentralized finance (DeFi).
On August 8, the BOK released a report titled “The Possibility of a Paradigm Shift in the Financial Sector Caused by Digital Innovation” (literal translation). The BOK’s researchers forecasted in the paper that cryptoassets would continue to be of interest to the private sector in the future, where it would operate as a “investment and speculative” vehicle, and concluded that BTC and the like would most likely not completely replace fiat in the future, owing to volatility concerns.
However, the authors predicted that crypto would continue to have more “limited-purpose” adoption in the private sector, where its functionality would grow independently of fiat currency.
The study is not a policy document, but it does represent the opinions of at least some BOK employees.
The authors also mentioned the growing interest in DeFi, an industry sector they believe is on the rise, writing that while traditional financial institutions will continue to be most people’s go-to resource for “general transactions,” the role of DeFi, which is more specialized, “can continue to grow.”