South Korea to launch CBDC to over 100,000 citizens

Credit: Shutterstock
Credit: Shutterstock

The Bank of Korea (BOK) has announced it will launch its native Central Bank Digital Currency (CBDC) to up to 100,000 selected citizens next year. 

The pilot project by the BOK takes its next significant step into utilising the benefits of CBDCs from a “wholesale” standpoint. The CBDC programme has been in joint-development with the Financial Services Commission and the Financial Supervisory Service

The pilot project will enable the 100,000 selected users – which will be announced in  September and October 2024 – to make transactions with the digital currency in the form of deposit tokens to a selected number of eligible banks. 

The BOK will look to use wholesale CBDCs, which will only be transactable via financial institutions for the sole purpose of monetary transfers and settlements, as opposed to a retail CBDC, which will only be accessible to economic entities and businesses. 

Users will be restricted to the extent of the pilot CBDCs use however, with other payment elements such as remittance not able during the testing period, which is believed to last for three months. 

Over the course of this pilot testing period, Korean technology companies will develop further use cases and evaluate the overall effectiveness of the CBDC and whether it could become a viable and sustainable form of currency. 

The BOK and the Korean Exchange will also work in tandem on a simulation system for carbon emissions trading, looking into the delivery of CBDC payment transactions and whether they emit the right sustainable amount of emission rights. 

A BOK official confirmed the CBDC plans, stating: “Following consultations with relevant organisations and a review of related laws, the pilot project will be conducted first in the fourth quarter of 2024. The possibility of conducting separate pilots will be considered as well if banks propose new individual projects.”Plans for the distribution of the CBDC accelerated after Agustin Carstens, General Manager of the Bank of International Settlements (BIS), held a meeting with the BOK last Thursday (23 November).