The Bank of Korea (BOK), South Korea’s central bank, is set to initiate its central bank digital currency (CBDC) pilot. This will be done by inviting 100,000 Korean citizens to actively participate. The testing phase will commence in the fourth quarter of 2024, spanning three months from September to October.
The Scope of Participation
Notably, participants in this important experiment will be limited to using the CBDC exclusively for payment transactions. Also, there will be restrictions on storing, exchanging, or sending the digital currency to other users. This approach aims to rigorously assess the feasibility and effectiveness of issuing and distributing the CBDC.
Collaborative Efforts with Korea Exchange
In a strategic collaboration, the BOK will join forces with the Korea Exchange to seamlessly integrate the new digital currency into a simulation system designed for carbon emissions trading. This joint effort will not only test the CBDC’s compatibility but also further evaluate the feasibility of delivery versus payment transactions.
The official statement from the BOK, as reported by Korea Times on November 23, emphasizes the commitment to initiating the pilot project in the latter part of 2024. Additionally, there is openness to considering separate pilot initiatives should banks propose new individual projects.
Additionally, the BOK’s announcement coincided with a visit to Seoul by Agustin Carstens, the general manager of the Bank for International Settlements (BIS). Carstens publicly referred to the Korean CBDC project as the “digital won”. He further highlighted the global interest and recognition of this pioneering initiative.
Collaboration with BIS
The BOK’s CBDC pilot, launched in October, extends its reach beyond national borders. Private banks and public institutions will actively participate, with expert technical support provided by the BIS. Importantly, this collaboration positions the BIS at the forefront of global CBDC adoption. Furthermore, it showcases its involvement in various international projects.