According to a local South Korean media outlet, the Bank of Korea has selected three regions to pilot its central bank digital currency (CBDC), none including the country’s capital, Seoul.
The Bank of Korea confirmed on July 31 that Jeju, Busan, and Incheon have been selected as candidates for the “private target CBDC test bed.”
Eventually, according to the report, the bank intends to select one of the aforementioned regions, in addition to experimenting with public payments and distribution and acquiring subsidiaries that can accept CBDC payments.
A bank official is reported to have stated:
“The CBDC electronic wallet app will allow not only local residents but also many civilians, such as tourists to [partake].”
According to the Bank of Korea, the regional closed tests of the CBDC will be comparable to the issuance and distribution of the current local currency scheme in force in different regions of South Korea.
During the COVID-19 pandemic, the local currency scheme was implemented as a basic income and relief payment solution. Jeju, Busan, and Incheon are currently issuing and distributing their local currencies, namely “Tamranjeon,” “Dongbaekjeon,” and “Incheon e-Eum.”
An official from a commercial bank in Korea reportedly stated that the number of eligible citizens in Busan is “so large that the Bank of Korea is burdened in many ways” and that Jeju, which has the second-largest population, was “strongly preferred.”
The local report indicates that the local currency scheme has fewer “technical barriers” to surmount than CBDCs.
Multiple banks in South Korea have disclosed that, for efficiency purposes, they are conducting research on stablecoins as alternatives to CBDC.
