South Korea Launches CBDC Pilot Program

South Korea joins the growing number of nations introducing pilot programs for central bank digital currency (CBDC).

The Bank of Korea (BOK), the country’s central bank, will initiate the pilot project to investigate the technical infrastructure for a CBDC.

The BOK, the Financial Services Commission (FSC), and the Financial Supervisory Service (FSS) jointly announced the CBDC pilot on October 4.

According to the announcement, the initiative will evaluate the viability of a future financial system based on “wholesale CBDCs.”

Private banks and public institutions will participate in the pilot, and the Bank for International Settlements (BIS) will provide expert technical support.

The BOK will examine both retail and wholesale CBD products. Within the experimental framework of a wholesale CBDC, the banks will tokenize their deposits and disseminate them on the BOK, FSC, and FSS-monitored networks.

After the system’s installation in the fourth quarter of 2024, the retail CBDC should undergo live testing. As is customary with CBDC tests, the BOK observes that the pilot test does not imply eventual implementation.

“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.“

However, the first deputy governor of the FSS, Lee Myung-soon, described the pilot as a precursor to the future monetary system.

These comments are a repeat of one of the top officials from France’s central bank’s September 3 statement.

In his speech, the first deputy governor of the Banque de France, Denis Beau, referred to the CBDC as “the catalyst for improving cross-border payments by facilitating the development of a new international monetary system.”