In addition to the Commercial Bank, the Bank for International Settlements (BIS) will participate in the pilot to provide technical guidance and expertise to users.
South Korea has become the latest country to conduct a pilot program to explore the technical infrastructure needed for a central bank digital currency (CBDC,
On October 4, the Bank of Korea announced plans to launch a trial run for the digital currency later this month with some of the country’s financial regulators, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS). The move is a collaborative effort by the agencies mentioned above to evaluate the feasibility of a potential future monetary system that relies on a “wholesale CBDC.”
Commercial banks in South Korea to participate in CBDC pilot program
According to the joint announcement, commercial banks in the country will participate in the CBDC pilot program. The bank will issue payment instruments in the form of tokenized deposits, which will be made accessible to the general public, including private and public institutions, through a CBDC network created by the central bank.
The platform is scheduled to launch this month, and CBDC trials are expected to take place shortly after its launch by the end of next year.
In addition to the Commercial Bank, the Bank for International Settlements (BIS) will participate in the pilot to provide technical guidance and expertise to users.
“Together with BOK, we will bring some expertise and know-how to run the experiments. But we are also very keen to learn from BOK’s own expertise and direct experience of running a wholesale CBDC project in a developed and digitalized economy like Korea,” said Cecilia Skingsley, Head of the BIS Innovation Hub.
A prototype for the future of the monetary system
South Korea first announced its plans to explore the potential of a CBDC in 2020, and now the country has taken its first steps toward adopting digital currencies.
The country initially planned to engage specifically with a wholesale CBDC, designed to facilitate the settlement of interbank transfers and other wholesale transactions. However, the upcoming pilot program represents a significant change in the plan as it will include the exploration of both retail and wholesale CBDCs.
In July, Coinspeaker informed of That South Korea had chosen three cities outside the country’s capital Seoul to conduct the pilot program. The selected cities are Jeju, Busan and Incheon.
Emphasizing that this exploration does not automatically equate to immediate implementation, FSS First Deputy Governor Lee Myung-soon called the pilot project an important step toward shaping the future monetary landscape.
“The BOK has continuously advanced CBDC-related technical research. This test, building on past achievements, represents an important step towards creating a prototype for the future monetary system.
Central banks are exploring the potential uses of CBDCs
Meanwhile, the Bank of Korea’s CBDC pilot program is in line with the global trend, as central banks are increasingly adopting CBDCs while taking broader steps toward digitalization. Last year, BIS conducted a survey that revealed that about 93% of central banks around the world were actively engaged in various CBD-related initiatives.
In July this year, BIS released another report stating that more than 24 countries around the world are set to adopt CBDCs by 2030, signaling a transformational change in the global financial landscape.
countries like Nigeria And the Bahamas has already adopted digital currencies, while developed countries like the United States remain cautious about introducing CBDCs.
On the other hand, China is adopting an aggressive stance by expanding its pilot system. Additionally, countries such as Japan and the United Kingdom continue to research the potential use of digital currencies.
Chimamanda is a crypto enthusiast and experienced writer who focuses on the dynamic world of cryptocurrencies. She joined the industry in 2019 and has since developed her interest in emerging economies. She combines her passion for blockchain technology with her love for travel and food, bringing a new and fascinating perspective to her work.
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