South Korea joins a growing number of nations researching central bank digital currencies (CBDCs). The Bank of Korea (BOK) will launch the pilot project, exploring the technical infrastructure for a digital currency.
The joint announcement of the CBDC pilot by the BOK, the Financial Services Commission (FSC), and the Financial Supervisory Service (FSS) was published on Oct.4. According to the document, the project will assess the viability of a future monetary system grounded on “wholesale CBDCs.”
The pilot will include private banks and public institutions, while the Bank for International Settlements (BIS) will support it with technical expertise. The BOK is going to test both retail and wholesale types of CBDC. Within the experimental framework of the latter, the banks will tokenize their deposits and circulate them in the network, monitored by the BOK, FSC and FSS. The live testing of the retail CBDC should begin right after the system setup in Q4 2024.
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As it usually goes with the CBDC tests, the BOK notes that the exploring doesn’t equal the inevitable implementation. However, the First Deputy Governor of the FSS, Lee Myung-soon, called the pilot a step 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 words resonated with a statement made by one of the chief executives of France’s Central Bank on Sept. 3. In his speech, Denis Beau, the first deputy governor at Banque de France, called the CBDC “the catalyst for improving cross-border payments by enabling the build-up of a new international monetary system.”