A large Republic of Korea flag fluttered at a parade in the streets of Seoul
A large Republic of Korea flag fluttered at a parade in the streets of Seoul on 31 August, 2019. Chintung Lee/Shutterstock

South Korea’s central bank, Bank of Korea (BoK), will begin its final testing phase of its Central Bank Digital Currency (CBDC) next year, local media outlet The Korea Times reported on 7 October.

According to the publication, BoK plans to begin the third, and final, phase of its pilot scheme next year, which will see the bank test the distribution of its digital won. The bank further stressed that these tests will be conducted in a virtual environment, and that there would be no third party involved in the process. An official from BoK told The Korea Times:

“We will create a virtual environment by using blockchain technology and test whether our CBDC can be used for real-world transactions. The CBDC will be issued and circulated in the virtual world and we are going to test a number of transaction scenarios under a variety of circumstances.”

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Even though it has made great progress in its pilot program, BoK continues to claim that it has no plans of launching the CBDC to the general public, and that it is conducting these tests with the goal of being prepared if the national or global conditions change. Originally the bank claimed it saw no need for a CBDC altogether, but quickly changed its stance after more and more countries began their own trial projects.

The 22-month CBDC pilot scheme was first launched in April 2020, and appears to be on schedule with the roadmap presented at the time. The first phase, completed in July, was focused on the requirements and design of the CBDC. The second phase, which is currently underway, has the goal of analyzing business processes, and looking at the likely infrastructure with an outside partner.

Another reason for accelerating BoK’s efforts in this research could be China, which is making steady progress in its real-world trials of the DC/EP (digital currency/electronic payment) system. This Monday an official from People’s Bank of China (PBoC) revealed that the digital yuan has already been used in more than 3 million transactions, with a total value of around $162 million.

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