In a significant move towards digital currency adoption, the Bank of Korea (BOK) has announced its intention to involve 100,000 citizens in a pilot program to test the central bank digital currency (CBDC). Set to commence around September to October of 2024, the three-month testing phase aims to evaluate the feasibility and effectiveness of issuing and distributing the CBDC.
Participants in this groundbreaking initiative will be exclusively limited to using the CBDC for payments, with restrictions on storage, exchange, or transfers to other users. This focused approach seeks to gauge the real-world application and acceptance of the digital currency for everyday transactions.
As reported by the Korea Times on November 23, the BOK plans to collaborate with the Korea Exchange to integrate the CBDC into a simulation system for carbon emissions trading. This integration will specifically assess the feasibility of delivery versus payment transactions within the carbon emissions trading framework.
The CBDC pilot, launched by the Bank of Korea in October, encompasses both retail and wholesale CBDCs. Private banks and public institutions are expected to participate, with the Bank for International Settlements (BIS) providing expert technical support. The involvement of the BIS underscores its leading role in global CBDC adoption.
Notably, the BIS is actively contributing to various CBDC initiatives worldwide. Apart from assisting the Bank of Korea, the BIS is collaborating with the Swiss National Bank in developing a wholesale CBDC. Additionally, it is playing a pivotal role in establishing a joint platform with the central monetary authorities of China, Hong Kong, Thailand, and the United Arab Emirates. The BIS is also engaged in developing a proof-of-concept for a transactions tracker in partnership with the European Central Bank, among other global projects.
South Korea’s ambitious CBDC testing program signifies a crucial step toward the potential integration of digital currencies into the mainstream financial landscape, with a focus on real-world applications and user interactions.