Joining the global CBDC wave, South Korea has officially initiated the process of implementing pilot programs for this form of digital currency. The country’s central bank, the Bank of Korea (BOK), is set to launch a pilot project aimed at exploring the technical infrastructure for CBDC.
In an announcement made on October 4th regarding BOK’s CBDC trial, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) stated that the project will assess the viability of a future retail CBDC system. The pilot will involve private banks and public institutions, with technical support provided by the Bank for International Settlements (BIS). BOK will test both retail and wholesale CBDCs.
Under the wholesale CBDC trial, banks will encrypt their deposits and circulate them within a network supervised by BOK, FSC, and FSS. The direct testing of retail CBDCs is scheduled to commence in the fourth quarter of 2024.
While the pilot is underway, it doesn’t necessarily guarantee the full deployment of CBDCs. However, according to Lee Myung-soon, the First Deputy Governor of the FSS, this trial represents a step toward the future monetary system.
“BOK has consistently pursued research related to CBDC technology. This trial, based on past achievements, signifies a significant step toward creating a prototype for the future monetary system.”
This perspective aligns with statements made by one of the Deputy Governors of the Bank of France on September 3rd.
In his speech, Denis Beau, the First Deputy Governor at Banque de France, referred to CBDCs as a “catalyst for improving cross-border payments” by enabling the development of a new international monetary system.