South Korea and its National Digital Currency
The Bank of Korea is working hard to develop a digital currency and it is moving forward with its national digital currency plans. The country’s central bank is looking for a technology supplier to design a pilot platform for the digital won.
The central bank announced that it launched a process to choose a tech partner for exploring the practicalities of launching a central bank digital currency (CBDC) in a test environment. It said that the latest move comes in response to fast changes in the global financial system. The share of cash transactions continues to decline and this tendency will only gain strength in the future. The Bank of Korea is ready to adapt to the new reality.
The pilot CBDC platform will include simulations of commercial banks and retail outlets. It will also include test payments via mobile phones, fund transfers, and deposits. The pilot program is scheduled to run from August to December 2021. It could potentially be extended into next year.
Bank of Korea and its digital currency plans
The country’s central bank published a CBDC-related book in February. The Bank of Korea announced plans to test the distribution of a digital won. It also plans to outline the legal challenges associated with a national digital currency.
South Korean commercial bank Shinhan Bank developed a blockchain-based pilot program for a CBDC in a collaboration with LG CNS. Its CBDC system allows individuals and affiliates to use the issued CBDC for various purposes.
The bank is ready to cooperate with the country’s central bank to develop a national digital currency. It created a virtual CBDC model Shinhan Bank emphasized that CBDC intermediaries would be an integral part of a digital won ecosystem.