Bank of Korea Launches Digital Currency Pilot
- The new CBDC pilot will look into the technological and legal issues of replacing fiat cash with a digital equivalent.
- Though still skeptical, the Bank of Korea wishes to be prepared should there be a shift in “domestic and external conditions”.
Illustration from Freepik
South Korea has launched a pilot program to assess the technical and legal ramifications of issuing a Central Bank Digital Currency (CBDC), the Bank of Korea (BOK) said in a press release on 6 April.
According to the announcement, the new pilot program will look into the technological and legal issues of replacing fiat cash with a digital equivalent, and will run for 22 months. The BOK seems to have moved away from its “wait-and-see approach” after other nations, such as Japan and the U.S., accelerated their plans for a CBDC.
A BOK official told The Korean Times on Monday:
“The U.S. and Japan had had no plans to issue a CBDC in the near future, but they changed their stance recently to enhance research in the emerging area. The BOK also decided to remain proactive in the rapid shift in payment environments here and abroad, so we are going to set up the CBDC pilot system and check technical and legal issues surrounding its introduction here.”
In the press release, South Korea’s central bank made it clear that while it has no immediate plans to introduce a digital currency in the country as of yet, it wishes to be prepared for such a move, should there be a shift in “domestic and external conditions”. The press release reads:
“The need to issue a CBDC in the near future still remains slim when considering the demand for cash that still exists, the competitive payment service market and high-level financial inclusion, but there is a need to be able to quickly take steps in case market conditions at home and abroad change rapidly.”
The pilot will have several phases, with the first one running for five months, until July 2020, and aiming to define the requirements and design of the CBDC. It will also overlap with a review of the technology needed to implement the digital currency, which will be conducted between April and August. Following the initial phase, the BOK will conduct an analysis of business processes, until the end of 2020, after which it will focus on building and testing the CBDC pilot system.
Back in February, Sweden’s Central Bank launched a pilot scheme to determine if its e-krona’s performance is sufficient and reliable. At the time, the bank said it will run the project in an “isolated test environment”, with participants playing out different scenarios for one year, until February 2021.
- One of the largest South Korean commercial banks, KEB Hana Bank, partnered with crypto custodian BitGo in order to set up a new crypto custody venture in the country.
- The new venture, which will use BitGo’s crypto security expertise and Hana’s experience in financial services and compliance, is expected to launch in the second half of 2024.
Shutterstock
- The now arrested Terraform Labs CEO had reportedly converted the majority of his illicit funds into BTC using foreign exchanged not under the jurisdiction of South Korea.
- While none of the assets tied to Do Kwon were recoverable, South Korean authorities continue to seize assets and properties tied to other executives of Terra.
- A person suspected to be Terra founder Do Kwon was arrested at the airport in Montenegro’s capital city of Podgorica with “falsified documents”.
- South Korean authorities have confirmed the individual was Do Kwon based on “photo data”, name, age, and nationality, but are still waiting for fingerprint information.