The Bank of Korea (BOK) has announced plans to roll out a “real-world” pilot of its Central Bank Digital Currency (CBDC) by the fourth quarter of FY2024, marking a significant move toward digital currency adoption in the country.
As reported by KBS, the BOK will collaborate with South Korea’s premier financial regulators, namely the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS), to further advance its CBDC initiative.
The BOK highlighted that this “real-world” trial would involve “members of the general public” utilizing the retail-oriented version of the digital coin for their transactions.
Concurrently, the central bank also plans to undertake trials on a wholesale variant of the CBDC.
Wholesale (or institutional) CBDCs are tailored for use primarily within the financial and banking industries, offering a central bank-issued digital token.
In the context of South Korea, such a coin would predominantly facilitate inter-bank settlements.
Conversely, retail CBDCs serve as a digital alternative to physical cash and debit cards for everyday transactions in the wider payments ecosystem.
For its exploratory phase concerning the wholesale CBDC, the Bank of Korea (BOK) plans to collaborate with local banks. These institutions will digitize inter-bank operations using platforms provided by the central bank.
Furthermore, the Bank for International Settlements (BIS), a strong advocate for CBDC interoperability, is set to extend technical support to this initiative.
How Close Is Bank of Korea to Issuing a CBDC?
The Bank of Korea (BOK) remains equivocal about its position on issuing a CBDC.
Its publications pertaining to the digital won clearly state that the central bank “has not yet determined” whether it will proceed with the issuance of a CBDC.
Reiterating this stance, the BOK recently emphasized its uncertainty regarding the launch of a digital won. The bank clarified:
“The ongoing pilot serves as a means to investigate the most fitting CBDC design tailored to the unique financial and economic conditions of South Korea. […] Initiating this pilot should not be interpreted as a sign of our commitment to a full-fledged CBDC rollout.”
The BOK, in conjunction with its regulatory collaborators, announced plans to unveil further details, which will encompass the identities of the banks set to join this experimental phase, by the end of November.