Jang Dong-hyuk, leader of the People Power Party, said the party strongly opposes the introduction of a central bank digital currency until legal and institutional safeguards are fully in place, criticizing the Bank of Korea for moving quickly on the project.
Jang made the remarks in a Facebook post on the 13th, asking whether authorities had already forgotten the failure of single-stock leveraged exchange-traded funds.
Jang has argued that a CBDC could be used by the central bank as a means of controlling citizens' financial transactions, and that its adoption requires caution. "Some see a CBDC as a new technology that can improve the convenience and efficiency of payments, but convenience alone is no reason to rush," he said. "We must first answer how far citizens' transactions can be tracked, whether this opens the way to controlling where and for how long money can be used, and whether citizens' right to choose their form of money is guaranteed."
He added that South Korea already has world-class financial and payment infrastructure. "There is no reason to run ahead at the risk of citizens' property rights and financial information," he said.
Jang noted that the United States has barred the pursuit of a retail CBDC, citing financial stability and the potential invasion of individual privacy. Major advanced economies including Japan are also not rushing toward formal issuance, he said.
"The only countries pushing large-scale pilot programs or phased mandates are China, Russia and India," he said. "I wonder why we would go out of our way to follow those countries."
He also said technology exists to make life more convenient for citizens. "Technology must not become an instrument of power capable of controlling the people," he said.
In July, the Financial Services Commission approved changes to the first phase of a deposit-token payment test run within the Bank of Korea's digital currency system, known as Project Hangang, to prepare for the second phase. The number of deposit-token wallets will be raised to a maximum of 500,000 from 100,000, and a remittance function will be added to the existing payment function. The holding limit per wallet will also be expanded to 10 million won from 1 million won.
The Bank of Korea, however, has rejected concerns that Project Hangang would allow the government or the central bank to control individuals' financial transactions. "As with existing bank deposits, the Bank of Korea and the government cannot identify or control the individual deposit-token holdings of Project Hangang participants," the central bank said earlier.
