South Korea unveils ambitious CBDC pilot, details here

• The pilot will have citizens engage with the CBDC for a duration of three months.
• This initiative is part of BOK’s broader strategy to evaluate the potential of issuing and circulating a digital currency.

The Bank of Korea (BOK), South Korea’s central bank, announced plans to kick off a central bank digital currency [CBDC] pilot, marking a pivotal step toward digital transformation.

The pilot, set to commence in the fourth quarter of 2024, will have citizens engage with the CBDC for a duration of three months.

The evaluation phase will be concluding around January 2025. The BOK will grant exclusive rights to participants, allowing them to leverage the CBDC solely for payments. These citizens, actively participating in the feasibility test, won’t have options for storage, exchange, or peer-to-peer transfers.

This initiative is part of BOK’s broader strategy to evaluate the potential of issuing and circulating a digital currency.

The citizens’ hands-on involvement will play a crucial role in gauging the currency’s adaptability and efficiency in practical, day-to-day transactions.

100,000 Citizens to participate in CBDC Testing

The ambitious project aims to include 100,000 Korean citizens. They will be active participants in testing the CBDC’s feasibility and real-world effectiveness.

The dynamic testing phase will not be limited to retail transactions. It will extend into the realm of carbon emissions trading.

The BOK will also collaborate with the Korea Exchange, to integrate the CBDC into a simulation system.

Notably, the BOK’s forward-thinking approach found resonance with the visit of Agustin Carstens, the general manager of the Bank for International Settlements (BIS), to Seoul.

Carstens publicly dubbed the Korean CBDC initiative as the “digital won”. He emphasized the groundbreaking nature of the project on the global stage.

The pilot’s initiation came on the heels of BOK’s October announcement, signaling its intention to delve into the realm of CBDCs.

The Bank for International Settlements (BIS) will provide robust technical support throughout the testing period. This is to ensure a high level of technical expertise.

The BIS’s role in global CBDC adoption is not confined to South Korea. The international financial body is actively supporting the Swiss National Bank in developing a wholesale CBDC.

Furthermore, it is playing a pivotal role in creating a joint platform, uniting central monetary authorities from China, Hong Kong, Thailand, and the United Arab Emirates.