The Bank of Korea (BoK), South Korea's central bank, has launched a cryptocurrency task force to explore the technology's effects on the financial system.

According to a report by local news agency Pulse News, the bank said that the task force will see participation from eight departments, including the financial stability and monetary policy units, to study on the impacts of digital currency.

The new group will be administered and assisted by BoK's payment and settlement department and will be headed by Shin Ho-soon, deputy governor of central bank, the report adds. BoK is also seeking to explore a central bank-backed digital currency as part of the project.

The announcement follows concerns raised in South Korea that the drastic growth in cryptocurrency prices could effect the traditional financial system.

Earlier this week, six unnamed banks in South Korea were scrutinized the Korean Financial Intelligence Unit and the Financial Supervisory Service for their relationship with the country's bitcoin exchange ecosystem. The regulators indicated at the time that they were looking into whether the banks are complying with their anti-money laundering (AML) obligations when transacting with cryptocurrency exchanges.

The government already said last month that it would move to apply more scrutiny amid growing trade volume at the exchanges, including a possible ban on anonymous trading. Earlier today, new reports suggested that the government of South Korea is intensifying its moves against the country's bitcoin exchanges.

Bank of Korea image via Shutterstock