The Bank of Korea (BOK) has revealed plans to involve 100,000 South Korean citizens in “real-world” central bank digital currency (CBDC) transactions starting next year. The central bank intends to conduct tests of the digital won in the fourth quarter of the next financial year.
According to reports, the BOK will collaborate with partner banks to identify suitable customers for its initial digital Korean won (KRW) test group. Despite these testing initiatives, the BOK has not officially decided whether it will proceed with the issuance of a CBDC.
BOK has accelerated its central bank digital currency (CBDC) project, citing the swift advancements in China’s digital yuan pilot as a motivating factor. While the BOK has emphasized that South Korean lawmakers must have the final say on the issuance of a CBDC, it has expressed a desire for members of the general public to participate in the trial.
The Bank of Korea plans to accept applications for the CBDC trial through its partner banks from September to October 2024. The trial will be limited to a maximum of 100,000 participants, marking a significant step in testing and gathering feedback on the potential implementation of a digital won.
South Korea: The Next Nation to Begin CBDC Pilots?
The Bank of Korea has outlined its initial focus for the issuance of central bank digital currency (CBDC) by introducing “digital vouchers” in the payments sphere. These digital vouchers may take the form of CBDC-powered childcare vouchers that can be redeemed at daycare centers, among other possibilities.
Commercial banks will be responsible for distributing these vouchers to approved customers. The BOK aims to concentrate on matters related to the usability of CBDC in this initial phase. However, the bank clarified that it will not seek to authorize real-world peer-to-peer (P2P) payments between individuals, except for testing purposes.
BOK has outlined a regulatory “sandbox” environment where partner banks, merchants, and service providers will continue to operate as the central bank moves forward with its central bank digital currency (CBDC) project. The BOK will collaborate with the country’s top financial regulators, the Financial Services Commission and the Financial Supervisory Service, in this initiative.
The bank has committed to consulting with related organizations and reviewing relevant laws before launching the pilot. In April, South Korean lawmakers introduced legislation to create a legal distinction between CBDCs and other cryptoassets, providing a regulatory framework for digital currency initiatives.
