South Korea sets up a CBDC pilot that will involve 100,000 participants
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South Korea is almost ready to launch its CBDC pilot, and preparations have already started. According to recent reports, the country is in the process of setting up a Central Bank Digital Currency pilot that will involve 100,000 people who will be testing it.
The fun is about to begin ladies and gentlemen!
Are you ready?
Bank of Korea is releasing a CBDC pilot in 2024 involving 100,000 citizens.
The CBDC pilot consists of a collaboration of the BIS and Bank of Korea.
They seem to be testing a ‘unified ledger’ that will…
— Miles Bron (@TheMilesBron) November 25, 2023
Local reports say that the pilot is supposed to last for three months and that it is set for the fourth quarter of 2024. The entity behind it is the Bank of Korea, which will organize the pilot with the participation of the Financial Services Commission and Financial Supervisory Service.
Korean authorities wish to see if a CBDC can deliver the promised benefits
Once the pilot kicks off and the CBDC is live and available for use, the 100,000 participants will be allowed to use it in several ways, such as by making direct purchases with deposit tokens issued by commercial banks in the form of a CBDC.
The Bank of Korea decided to go through with the process after long research, which led it to conclude that a CBDC could help tackle some of the issues seen in traditional finance. Specifically, it could positively impact high transaction fees that users of traditional banking systems have to pay even now, and it could also speed up the settlement process associated with government voucher systems.
These processes are typically used for things such as childcare payments, but they have been infamously slow and lengthy. With a CBDC replacement, they could be handled near-instantly, just like any other payment using digital currency.
Local reports have also noted that the Korea Exchange will be involved with the pilot. The exchange will integrate the digital currency into a special simulation system for carbon emissions trading, as reported by The Korea Times.
Participants must use CBDC for making payments
The same report also added that the project’s participants will be restricted in their use of the CBDC, Specifically, they will only be allowed to use it for its designated purpose, meaning making payments. They would not be able to use it for personal remittance or other uses that go beyond the plans laid out by the Bank of Korea.
Things like that might become a possibility in the future, if the pilot shows satisfactory performance, and the bank decides to implement it as one of the official payment methods in the country, but not before.
Furthermore, this will also be an opportunity for Korean authorities to conduct technological experiments that would evaluate the feasibility and efficiency of issuing and distributing the new form of financial products.
In other words, the future of digital assets in Korea depends on how the pilot ends up performing,
