The Bank of Korea (BOK), which is in South Korea, is all prepared to release a central bank digital currency (CBDC) pilot scheme. This will bring together 100,000 citizens in 2024. It will be in association with Korea’s Financial Services Commission (FSC) as well as the Financial Supervisory Service (FSS).
Following the launch, the Governor of the Bank of Korea, Rhee Chang-Yong, and the General Manager of the Bank for International Settlements (BIS), Agustin Carstens, will engage in a round of interaction. The BIS is the central bank-dedicated bank. Carsten compared the CBDC to a digital winning, and was extremely grateful to the central bank for taking the initiative to endorse a futuristic financial mechanism.
The Bank of Korea announced the commencement of real-time CBDC testing in October 2023, in collaboration with the BIS and several other institutions.
Roughly 100,000 nationals will be taking part in the pilot program, giving way to the buying of products via deposit tokens released by commercial banks such as CDBC. As per a Korean Times report, the process will be as simplified as the usage of vouchers in stores.
The participants will be selected by specific commercial banks, and the onboarding will happen in the months of September and October 2024. A trial project will be conducted over a period of three months. It will be for payment issues only.
According to an officer of the Bank of Korea, the initial pilot project is scheduled for Q4 of 2024, after several consultations with concerned bodies and a thorough study of the respective regulations. In the case of separate projects, there may be a requirement for more pilot projects.
In the opinion of the Bank of Korea, digital currencies may be able to address the multiple factors that come in the way of the present voucher method. This includes the grants utilized during the COVID-19 pandemic. Added to that is the issue of government-provided childcare and other such activities. It will help in reducing transaction fees, delayed settlement periods, and the chances of risks.
Further to that, the Bank of Korea intends to carry out technical testing, like incorporating the CBDC into a reproduced mechanism for the purpose of carbon emission trading.