Korea-IMF Joint International Conference Held... Choo Kyung-ho Calls for Alternatives Including Central Bank Digital Currency

On the 14th-15th, under the theme 'Digital Currency: Exploring the Changing Financial Environment'

The Ministry of Economy and Finance, the Financial Services Commission, and the Bank of Korea will jointly host an international conference titled "Digital Currency: Exploring the Changing Financial Environment" from the 14th to the 15th at the Four Seasons Hotel in Gwanghwamun, Seoul, in collaboration with the International Monetary Fund (IMF).

On July 16, 2022, at the G20 Finance Ministers and Central Bank Governors Meeting held in Bali, Indonesia, Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho met with IMF Managing Director Kristalina Georgieva.

This conference marks the first joint event between the Korean government and the IMF in six years since 2017. High-level officials from the co-hosting organizations, including Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho, IMF Managing Director Kristalina Georgieva, Bank of Korea Governor Lee Chang-yong, and Financial Services Commission Vice Chairman Kim So-young, along with domestic and international digital currency experts, will attend.

In his opening remarks, Deputy Prime Minister Choo pointed out that digital currency is a double-edged sword, possessing both innovation and instability. He stated, "Digital currencies open new industries and markets, as seen in cases like tokenized securities, creating opportunities for economic growth and job creation, but they are somewhat vulnerable in terms of reliability and stability." He further noted, "As traditional monetary policies become less effective, and the current financial crisis response system that mitigates rapid capital inflows and outflows deteriorates, the effectiveness of policies declines."

Deputy Prime Minister Choo emphasized, "The government's role is to establish an institutional foundation to ensure that digital currency does not undermine the stability of the current economic and financial system." To this end, he added, "The government must design flexible policies and systems within an appropriate regulatory framework, seek alternatives to secure platform stability such as central bank digital currencies (CBDCs), and establish global standards through cooperation among international organizations."

Vice Chairman Kim introduced global regulatory trends and the current status of domestic policies, including the enforcement of the Virtual Asset Act tailored to these trends. He also mentioned the need to strengthen international cooperation to build an effective regulatory system due to the frequent nature of cross-border transactions.

In her keynote speech, Managing Director Georgieva stated, "Digital financial systems have advantages in terms of safe and efficient payments and transactions," but warned, "If not properly regulated, they can weaken the effectiveness of monetary policy and capital flow management measures." To prevent such side effects, she advocated for appropriate regulation and discipline of crypto asset issuers and issuing institutions.

The first day of the conference will focus on discussions about digital currency. The first session will include Managing Director Georgieva and Vice Chairman Kim, who will discuss the impact of digital currency on the macroeconomy and financial systems.

The second session will explore the various potential uses of digital currency and discuss regulatory and technical foundations for stable utilization. The final session of the first day will involve discussions on regulatory trends for virtual assets in different countries and the need for internationally consistent regulations.

On the second day, discussions will center on central bank digital currencies. Topics will include the impact of digital currency on the role of central banks, the potential coexistence between stablecoins and central bank digital currencies, and the use of cross-border central bank digital currencies.

Finally, a high-level policy discussion will be held with participation from Governor Lee and the Governor of the National Bank of Cambodia, focusing on the role of central banks in the digital economy and the benefits and risk factors of digital currency.