Private banks and public institutions will participate in the pilot, and the Bank for International Settlements (BIS) will provide technical support.
South Korea researches central bank digital currencies (CBDCs) alongside an increasing number of countries.
The Bank of Korea (BOK) will initiate a pilot initiative to investigate the technical infrastructure for a digital currency.
The BOK, the Financial Services Commission (FSC), and the Financial Supervisory Service (FSS) jointly announced the CBDC pilot on October 4.
The document states that the initiative will evaluate the viability of a future monetary system based on “wholesale CBDCs.”
Private banks and public institutions will participate in the pilot, and the Bank for International Settlements (BIS) will provide technical support.
The BOK will evaluate both retail and wholesale CBDC products.
Meanwhile, within the experimental framework of the latter, banks will tokenize their deposits and circulate them across the network under the supervision of the BOK, FSC, and FSS.
The live testing of the retail CBDC should commence immediately following the system’s installation in Q4 2024.
As is typical with CBDC tests, the BOK emphasizes that exploration is not equivalent to inevitable implementation.
First Deputy Governor of the FSS, Lee Myung-soon, referred to the pilot as a precursor 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 remarks echoed a statement by one of the French Central Bank’s top executives on September 3.
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 enabling the build-up of a new international monetary system.”
