SOUTH KOREA - The Bank of Korea (BOK) is moving forward with its plans to test a central bank digital currency (CBDC) by scheduling a pilot program to commence in late Q4 2024. The trial, involving 100,000 participants, is designed to assess the use of deposit tokens strictly for payment transactions over a three-month period.
This initiative, as reported by The Korea Times, is expected to begin between September and October next year. The BOK has been methodically preparing for this pilot, following consultations with relevant organizations and comprehensive legal reviews. An official from the bank underscored the importance of evaluating both the feasibility and effectiveness of the CBDC during this trial phase.
In a strategic move, the central bank also aims to integrate the CBDC trial with carbon emission trading simulations. This will allow the BOK to examine the delivery versus payment processes involving carbon credits, a step that underscores the potential for CBDCs to contribute to broader economic and environmental initiatives.
Jeju Island has been shortlisted as the preferred location for the pilot, primarily due to its optimal population size that allows for a manageable and controlled scope of the trial. This selection also takes into account individual project proposals that could lead to additional pilots being conducted. Jeju, along with Busan and Incheon, was considered for the pilot, with the former emerging as the most suitable candidate.
The BOK's CBDC pilot is a significant step in South Korea's exploration of digital currencies and their integration into the national financial system. The outcomes of this trial could have far-reaching implications for the future of digital payments and policy-making in the country's financial sector.
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