Bank of Korea Announces CBDC Pilot Test

Key Takeaways

1. South Korea will test the infrastructures for a central bank digital currency(CBDC).
2. The project ushers in a new era of cooperation with the Bank of International Settlement(BIS).

Seoul(ON-CHAIN MEDIA):

The Bank of Korea(BOK)has announced a pilot test for the build-up of the country's future central bank digital currency(CBDC), according to an official report from BOK's headquarters in Central Seoul.

At a joint press briefing, Bank of Korea's Senior Deputy Gov. Ryoo Sang-dai, Financial Services Commission's Vice Chairman Kim So-young and Financial Supervisory Service's First Senior Deputy Governor Lee Myung-soon, announced that banks, financial institutions and individuals will be able to participate in the tests.

However, the first phase of the CBDC pilot test, which is due to begin this month, is limited to the participation of commercial banks, while the retail CBDC testing under the pilot program may commence by Q4 2024.

With technical support from the Bank of International Settlement(BIS), South Korea has joined the growing list of countries that are conducting both retail and wholesale CBDC pilot tests.

“Korea is one of the top countries in terms of information technology. Diverse types of payment services are utilized here. The outstanding infrastructure allowed cooperation with the BIS,” FSS Senior First Deputy Governor Lee Myung-soon told journalists during the press briefing.

Is South Korea Ready For Its Own CBDC?

Following the launch of the pilot project, observers are wondering whether the East Asian country will eventually mint its own CBDC.

In July, the BOK selected three regions excluding Seoul, the country's capital, for a potential CBDC experiment but there has been no official statement that the central bank would be issuing a CBDC any time soon.

Addressing the press, Lee described the pilot project as "a significant step towards creating a prototype for the future monetary system".