South Korea Starts Trial Of Central Bank Digital Currency

South Korean central bank tested CBDC. (Photo; Doc. TheBestBitcoinRobots)

JAKARTA - South Korea has joined countries conducting trials to explore the technical infrastructure needed for central bank digital currencies (CBDC).

On October 4, the Bank of Korea, along with financial regulators such as Financial Services Commission (FSC) and Financial Supervisory Service (FSS), announced plans to launch digital currency trials by the end of this month. This initiative is a collaboration between these institutions to evaluate future monetary systems that have the potential to rely on wholesale CBDCs."

Commercial banks in South Korea will participate in this CBDC pilot program. They will issue payment instruments in the form of token deposits that can be accessed by the general public, including private and public institutions, through the CBDC network issued by the central bank. The launch of the platform is scheduled for this month, and CBDC testing is expected to continue until the end of next year.

In addition to commercial banks, Bank for International Settlements (BIS) will also participate in this pilot program to provide technical guidance and expertise to users.

South Korea had previously announced its plans to explore the potential of CBDCs in 2020, with an initial focus on wholesale CBDCs designed for interbank transfer completion and other wholesale transactions. However, the upcoming pilot program reflects significant changes to the plan, as it will include retail and wholesale CBDC exploration.

In July, South Korea had chosen three cities outside the capital, namely Jeju, Busan, and Incheon, to be the launch sites of this pilot program. Although this program is an early exploration, stakeholders consider it an important step in shaping the future of the monetary system.

Central Bank And CBDC In The Digital Age

The CBDC Bank of Korea pilot program reflects a global trend in which central banks around the world are increasingly supporting CBDC on their way to digitalization. Last year's BIS survey showed that about 93% of central banks around the world were actively involved in various CBDC-related initiatives.

In July, BIS reported that more than 24 countries around the world had prepared to adopt CBDC by 2030, marking a major shift in the global financial landscape. Several countries such as Nigeria and the Bahamas have adopted digital currencies, while others, such as the United States, continue to consider the introduction of CBDC.

Amid these changes, China has become one of the countries that is aggressive in developing the CBDC system, while countries such as Japan and the UK continue to explore the potential use of digital currencies in the future.