With governments all over the world looking for ways to mitigate the financial damage of the coronavirus outbreak, many thinkers are openly asking if cash, already looking outdated before the pandemic, is the right tool for the job in a pre-vaccinated world.
In South Korea, both the private and the public sector are asking if local stablecoins could help the country – and other nations – out of its forthcoming economic quagmire.
As previously reported, yesterday telecoms provider KT, operator of a new stablecoin in South Kora’s biggest city, Busan (also the home of the country’s only regulatory blockchain sandbox), agreed to pay for the transaction fees and management-associated bills for “emergency fund” payouts in the city made using the new token.
South Korea’s central government has pledged to issue the entire nation with payouts in a bid to stimulate the economy. However, as Seoul has allowed local authorities to take charge of the distribution effort, some believe that local stablecoins – which have been on the march in South Korea of late – will play an increasingly large role.
Busan authorities believe that up to 30% of households will choose to receive their payouts in the form of the new stablecoin, named the Dongbaekjeon, and the pandemic could lead to an unexpected boom in local government-issued, blockchain-powered digital tokens.
Data released by Busan authorities late last week provided some surprising reading: 760,000 Busan residents have made use of the token so far – 22% of the city’s population.
Per a report from Decenter, the popularity of Dongbaekjeon has led Busan to expand the token’s reach. The city government has started work on building a “public mobile market platform” that it says will support Busan-based small and medium-sized businesses, with all transactions on the platform to be made in Dongbaekjeon tokens.
KT, which also co-runs large scale stablecoin projects in Gimpo, to the west of Seoul, and Ulsan (one of the biggest industrial cities in the country), could well be inspired to explore similar initiatives should local governments in these or other regions choose to go down the same path as Busan.
In fact, some South Korean provinces have been speaking about the idea of issuing local stablecoin payouts and expanding stablecoin projects to fight COVID-19 since March this year.
The report adds that American efforts to issue cash handouts to citizens have encountered a large range of difficulties, leading to calls to introduce a digital dollar – a state-issued stablecoin – as a more effective way of distributing emergency funds during times of crisis.
The same media outlet quotes Park Soo-yong, the Director of the Blockchain Research Center at Sogang University, as stating,
“The Dongbaekjeon is a locally operated currency, so it will not encounter bottlenecks, even when large numbers of users try to make use of it at the same time. With contact-free technology now so important, it is a natural trend to digitize technology. The payment of emergency aid handouts will be a good test for blockchain-based local stablecoins.”