South Korea’s central bank, the Bank of Korea (BOK), has revealed its plans to engage 100,000 Korean citizens in an extensive Central Bank Digital Currency (CBDC) pilot program scheduled to commence in late 2024, as reported by the Korea Times.
During the pilot program, participants will be allowed to utilize “deposit tokens” to make payments when buying goods from vendors. However, they will not be able to store, exchange, or transfer these tokens, highlighting a focus on their use only for transactions.
The Bank of Korea aims to assess the feasibility and effectiveness of issuing and distributing a central bank digital currency (CBDC). To that end, it plans to conduct various experiments on different applications of the technology.
The pilot program will be conducted collaboratively with other financial authorities and institutions in the country. According to the Korea Times, the participating commercial banks will recruit participants from September to October 2024 and continue the project for three months.
Notably, in July 2023, the Bank of Korea confirmed three districts—Jeju, Busan, and Incheon—as pilot locations for a CBDC trial. However, at that time, it did not specify a start date but indicated the trials would commence in 2024.
The pilot program was officially announced during a meeting between the governor of BOK, Rhee Chang-Yong, and the general manager of the Bank for International Settlements (BIS), Agustin Carstens. In the last few months, the BIS has actively promoted CBDCs as the future of monetary systems and provided technical support to various CBDC projects globally. Carstens, who was visiting Seoul, commended the initiative and the BOK’s efforts to adopt CBDCs.
This CBDC trial represents a significant step forward in South Korea’s exploration of digital currency technology and its potential impacts on finance and payments. The BOK recently completed the second phase of its 10-month simulation experiment, which focused on the retail utilization of CBDCs, and it announced its intentions to experiment with CBDCs in the real world and in real time in October. The completed experiments inlcuded a collaboration with the South Korean electronics manufacturer, Samsung, to research the offline capabilities of Central Bank digital currencies for payments.
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