South Korea’s central bank will launch a pilot program for its central bank digital currency (CBDC) to explore infrastructure needs, according to a joint statement from the Bank of Korea (BOK), the country’s Financial Services Commission (FSC) and the country on October 4 the Financial Supervision Service (FSS).
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- According to the announcement, the pilot will assess the feasibility of a future monetary system based on wholesale CBDCs.
- A wholesale CBDC is used by financial institutions primarily for interbank settlements, rather than the everyday transactions that a retail CBDC enables.
- In the South Korean CBDC pilot, participating banks will tokenize their deposits and circulate them on the network, which will then be monitored by the BOK, FSC and FSS.
- The Bank for International Settlements (BIS) will provide technical support for the trials.
- The live test of the South Korean retail CBDC is scheduled to begin in the fourth quarter of 2024.
- South Korea joins a growing number of Asian countries exploring CBDCs. The Hong Kong Monetary Authority launched its CBDC pilot program in May, while the neighboring Bank of Japan began discussions with 60 countries about a pilot program in July.
- According to the Atlantic Council, at least 130 countries, representing 98% of global GDP, are exploring CBDCs, up from 35 countries in May 2020.
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