Bank of Korea takes digital currency to next level

The South Korean central bank is to press ahead with the third and final phase of its CBDC pilot scheme: distribution of a digital won

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According to The Korea Times, the Bank of Korea (BOK), South Korea’s central bank, has announced its intention to start the distribution phase of its central bank digital currency (CBDC) pilot scheme in 2021. The bank completed the first phase of its trial programme in July 2020, which concerned the research and design of a potential digital won. The second phase is currently ongoing and is concerned with eliciting third-party consultation on the general scope of the project and the wider sector. The distribution and circulation of a CBDC within a virtual environment represents the third and final phase, and will end in December next year.

An official at the central bank sought to emphasise that no third party will be involved in the third stage at this point, stating: “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.”

The Bank of Korea has asserted that it currently has no concrete plans to launch a digital won in the near future. It nonetheless can be said to be laying the groundwork should the innovations made by other nations prove enviable.

If 2019 was the year in which central banks around the world were jolted into contemplating CBDCs, 2020 can be said to be the year of widespread research. The central banks of Japan, the UK, Sweden, Canada and Switzerland have teamed up with the European Central Bank (ECB) and the Bank for International Settlements (BIS) to share their findings.

The People’s Bank of China (PBoC) arguably remains at the forefront and the most likely to introduce a CBDC into the wider population. This week, it emerged that the Chinese central bank had completed three million individual settlements amounting to 1.1bn yuan ($161m, £125m, €137m) as part of its ongoing research into what it dubs “Digital Currency, Electronic Payment” (DECP).

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