Bank of Korea completes initial phase of digital currency test

South Korea's central bank hinted at possibility of trialling digital currencies

Bank of Korea                                 
South Korea's central bank is currently running the second phase of the trial, set to be finalised by June 2022 - Photo: Shutterstock
                                

The Bank of Korea completed the first phase of its digital currency (CBDC) test in December 2021, an initiative that was first announced back in early 2021, according to a report released on Monday. 

South Korea's central bank is currently running the second phase of the trial, which is set to be finalised by June 2022. 

"We will confirm the possibility of operating various functions, such as offline settlements, and the application of new technologies, such as one intended to strengthen privacy protection during the second phase of the test,” it confirmed in a statement. 

More than 90 central banks from Britain to Canada have been pursuing a move to issue CBDCs in a bid to prevent potential threats from cryptocurrencies and to modernise their own financial systems.

Last year, the Bank of England confirmed that it would explore the next steps of pursuing its own digital currency and weigh up the options of whether the institution would roll out a development phase of the project.

However, earlier this month, the House of Lords Economic Affairs Committee confirmed that there is "no convincing case" for the introduction of a UK central bank digital currency (CBDC) and that its unlikely for a digital currency to arrive before 2025.

“The introduction of a UK CBDC would have far-reaching consequences for households, businesses and the monetary system for decades to come and may pose significant risks depending on how it is designed," the committee’s report confirmed. 

China, on the other hand, has been working on developing its digital currency as early as 2014. Its digital coin, also known as the e-CNY, has been developed to replace the cash that's already in circulation and to accelerate the nations plans to move towards a digital economy.

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