South Korea joins a growing number of nations launching central bank digital currency (CBDC) pilot programs. The country’s central bank, the Bank of Korea (BOK), will launch the pilot project to explore the technical infrastructure for a CBDC.
The joint announcement of the CBDC pilot by the BOK, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) was published on Oct. 4. According to the announcement, the project will assess the viability of a future monetary system grounded on “wholesale CBDCs.“
The pilot will include private banks and public institutions, while the Bank for International Settlements (BIS) will provide expert technical support. The BOK is going to test both retail and wholesale CBDCs. Within the experimental framework of a wholesale CBDC, the banks will tokenize their deposits and circulate them in the network monitored by the BOK, the FSC and the FSS. Live testing of the retail CBDC should begin after the system setup in Q4 2024.
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As it usually goes with the CBDC tests, the BOK notes that the pilot trial doesn’t mean the inevitable implementation. However, Lee Myung-soon, the first deputy governor of the FSS, called the pilot a step to the future monetary system:
“The BOK has persistently pursued technological research related to CBDC. This test, building upon past achievements, represents a significant step towards creating a prototype for the future monetary system.“
These words resonate with a statement made by one of the chief executives of France’s central bank on Sept. 3. In his speech, Denis Beau, the first deputy governor at Banque de France, called the CBDC “the catalyst for improving cross-border payments by enabling the build-up of a new international monetary system.”