CBDC: Discussing Financial Stability Will a day come when we live in an era without bankbooks? While convenient payments using cards and smartphone apps have become part of our daily lives, the presence of physical cash is gradually fading. According to the Bank of Korea, as of 2024, the proportion of cash usage in domestic payments was 18.7%, a decrease of more than half from 39.2% in 2014, ten years prior. Concurrently, Central Bank Digital Currency (CBDC) has emerged as a hot topic worldwide. The debate is intensifying over whether digital currency merely represents a change in payment methods or signifies a shift in the financial paradigm. CBDC is a digital form of legal tender directly issued by a nation's central bank, aiming to secure financial stability and enable efficient monetary policy operations. According to a 2025 report by the Bank for International Settlements (BIS), 94% of central banks worldwide are researching CBDCs, with 24 countries already running pilot programs. However, this technological advancement does not present an entirely rosy picture. While major media outlets, including the Financial Times, evaluate CBDC as an evolution of national currency systems, The Economist raises concerns about issues of individual privacy control and the potential undermining of market autonomy. This article aims to provide an analytical framework for Korea to maintain a balanced perspective in these discussions and make appropriate decisions. Martin Wolf, chief economics commentator at the Financial Times, recently argued in an opinion column that CBDC could play a powerful role in mitigating declining cash usage and the instability of the private cryptocurrency market. Despite their convenience and innovativeness, cryptocurrencies have revealed limitations such as extreme price volatility and a lack of systematic oversight. Indeed, Bitcoin's price fluctuation reached 68% in 2025 alone, and incidents like the Terra-Luna crisis (2022) and FTX's bankruptcy (2022) clearly demonstrated the structural vulnerabilities of the private cryptocurrency market. In contrast, CBDCs, being directly issued and controlled by the state, can maintain monetary policy stability. Wolf emphasizes, "Digital currency issued by central banks is the only alternative that can absorb the innovation of private cryptocurrencies while simultaneously securing national monetary sovereignty and financial stability." By leveraging this, central banks can have tools to quickly adjust payment systems or ensure fund security even during financial crises. The payment efficiency highlighted by Wolf, in particular, can have a positive impact across the entire economic ecosystem, beyond mere technological convenience. According to a 2025 study by the International Monetary Fund (IMF), CBDC adoption could reduce cross-border remittance costs from the current average of 6.8% to below 1%, and transaction processing times could be shortened from 2-3 days to within minutes. Another significant advantage is the ability to provide financial inclusion to low-income individuals and residents in rural and fishing communities, who often lack access to banking services, through digital currency without requiring a bank account. According to World Bank statistics, approximately 1.4 billion people worldwide still do not have bank accounts, and CBDC offers a means to expand financial access for them. However, the pros and cons of CBDC are not straightforward. The Economist warns against CBDC, pointing to it as a risk factor that could alter the principles of a free market economy. According to the publication's analysis, CBDC opens up the possibility for central banks to extensively track individuals' transaction data, which could lead to infringements on personal privacy and excessive state control. China's digital yuan (e-CNY) serves as a prime example. As of 2023, the transaction volume of China's digital yuan exceeded 250 billion yuan (approximately 50 trillion KRW), but human rights organizations are concerned that the Chinese government could use it to monitor citizens' spending patterns and fund flows in real-time. The Economist warns, "Behind the convenience offered by CBDC lies an unprecedented power for the state to track and control all financial transactions." The Dilemma of Free Markets and Innovation Another serious concern is the potential weakening of commercial banks' deposit bases as users increasingly adopt digital currencies. A simulation study by the European Central Bank (ECB) suggests that if CBDCs are fully introduced, up to 30% of commercial bank deposits could shift to central bank digital currency, significantly limiting banks' lending capacity and negatively impacting corporate financing and economic growth. Particularly during financial crises, a 'digital bank run' where depositors massively shift funds to safe CBDCs could destabilize the entire financial system. This suggests that rather than fostering financial innovation, i
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