Bank Of Korea To Test Feasibility Of Digital Currency

With digitalization accelerating globally, most major central banks are exploring and experimenting with central bank digital currencies, or CBDCs.

This includes the Bank of Korea, which will kick off a 10-month simulation study of CBDCs in August to test ways of issuing, redeeming and making payments with a digital won.

“There’s great need for central banks to issue CBDCs as a safe means of payment that is free of credit risks and liquidity risks.”

The BOK’s pilot platform requires partnerships with private companies.

The central bank will issue the currency, and private financial services institutions, and fintech and IT companies will be in charge of the currency’s circulation.

All this will be done in a virtual environment.

“This is the first step in constructing an experimental environment for technological research into CBDCs. In phase one this year, we’ll conduct tests related to payments and deposits. Next year, in phase two, we’ll test remittances between countries, offline payments, and digital asset purchases, such as the purchase of digital artwork and copyrights.”

The BOK will also choose a private firm as a technology supplier… through open bidding.

Some companies have already shown interest, such as Naver, Kakao, and the IT arm of LG Corporation, LG CNS.