South Korea seeks to stop issuing paper money, but instead switch to non-cash transactions and electronic money under the scope of the cashless society project. According to the Bank of Korea, cryptocurrencies and blockchain technology will be the basis of this project.
The main goal of the cashless society project is to provide convenience to users and reduce costs of producing physical money. Coins and paper money will be taken out of use step by step.
In "2017 Payment Report" of the Bank of Korea, which was published on May 1, 2018, the regulator notes that it began to explore the possibilities of cryptocurrencies and blockchain technology, such as the use of passwords for payments. Also, there was created an organization to study the digital currency and analyze its impact on the overall financial system.
The government has another goal in the creation of such a society as well: it tends to fight against an underground economy, which largely depends on cash. Kwak Hyun-soo, an analyst at Shinhan Investment Corp noted:
"It 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)."
Cashless society appeared in plans as early as in 2016. In 2017, a pilot project was launched, in which about 30 thousand stores took part. Customers were offered to receive change from purchases in the form of depositing prepaid cards, which could later be used in discount stores or supermarkets. The full implementation of the cashless society project is expected by 2020.
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