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- During the pilot, citizens will be involved in the CBDC for 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), the central bank of South Korea, announced plans to start a central bank digital currency [CBDC] pilot, which marks a crucial step towards digital transformation.
The pilot, which will start in the fourth quarter of 2024, will involve citizens in the CBDC for three months.
The evaluation phase will be completed around January 2025. The BOK will grant exclusive rights to participants, allowing them to use the CBDC exclusively for payments. These citizens, who are actively participating in the feasibility test, will have no options for storage, exchange or peer-to-peer transfer.
This initiative is part of BOK’s broader strategy to evaluate the potential of issuing and circulating a digital currency.
The practical involvement of citizens will play a crucial role in measuring the currency’s adaptability and efficiency in practical, everyday transactions.
100,000 citizens participate in CBDC testing
The ambitious project aims to involve 100,000 Korean citizens. They will actively participate in testing the feasibility and effectiveness of the CBDC in the real world.
The dynamic testing phase will not be limited to retail transactions. It will extend to the area of carbon emissions trading.
The BOK will also work with the Korea Exchange to integrate the CBDC into a simulation system.
It is striking that the BOK’s progressive approach was echoed in the visit of Agustin Carstens, the general manager of the Bank for International Settlements (BIS), to Seoul.
Carstens publicly called the Korean CBDC initiative the “digital victory.” He emphasized the groundbreaking nature of the project on the world stage.
The start of the pilot came just after BOK’s October announcementindicating its intention to delve into the realm of CBDCs.
The Bank for International Settlements (BIS) will provide robust technical support throughout the test period. This is to ensure a high level of technical expertise.
The role of the BIS in the global acceptance of CBDC is not limited to South Korea. The international financial body is actively supporting the Swiss National Bank in the development of a wholesale CBDC.
Moreover, it plays a crucial role in creating a joint platform, uniting the central monetary authorities from China, Hong Kong, Thailand and the United Arab Emirates.
