Contents
- BIS and BOK Discuss Digital Currency Innovation
- Pilot for CBDC
- Probably more pilots
- Digital Currency Trailblazers: South Korea Sets the Standard
Various local media outlets have reported that the Bank of Korea (BOK) has revealed plans for a pilot program to test its new central bank digital currency (CBDC).
It is anticipated that the initiative, which will be carried out in association with the Financial Supervisory Service (FSS) and the Financial Services Commission (FSC), will begin in 2024.
BIS and BOK Discuss Digital Currency Innovation
The statement, which comes after a meeting between General Manager of the Bank for International Settlements Agustin Carstens and BOK Governor Rhee Chang-yong, highlights the interest in digital currency innovation throughout the world.
Carstens referred to the project as the "digital Won" and commended it for taking a forward-thinking approach to the future of monetary systems.
Pilot for CBDC
A major step toward incorporating digital currencies into regular transactions in the nation will be taken with the launch of the initiative, which will enable 100,000 Koreans to utilize deposit tokens based on the "digital Won" CBDC.
The goal of the central bank-backed digital currency known as the CBDC is to improve financial transactions and solve issues with the existing systems, such as exorbitant transaction costs and sluggish settlement times.
By utilizing deposit tokens—which function similarly to vouchers—issued by commercial banks, participants in the test program will be able to make purchases. The experiment is scheduled to begin in September 2024 and last for three months, during which time the chosen banks will recruit participants.
The BOK underlined the potential advantages of virtual currencies, particularly with regard to enhancing the security and efficiency of financial transactions. This covers specific applications, such as government grants, where fraud threats and post-transaction verification present challenges for the existing systems.
Nonetheless, throughout the pilot program, the usage of these virtual currencies will be restricted to approved payment applications, with limitations on personal remittances and other uses.
Probably more pilots
Along with the Korea Exchange, the BOK is investigating the possibility of incorporating CBDC into a model carbon emissions trading system. The feasibility of transactions, including payment tokens and carbon emissions rights, will be tested in this experiment.
In the future, the BOK intends to carry out the pilot in the fourth quarter of 2024, with the potential for further independent pilots contingent on bank proposals.
Digital Currency Trailblazers: South Korea Sets the Standard
With this move, South Korea takes the lead in integrating digital currencies and may establish standards for other countries in the future of financial transactions.
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