South Korea Latest to Announce CBDC Pilot

At present over 100 central banks are actively exploring the potential of central bank digital currencies (CBDCs). According to a recent survey by the Bank for International Settlements (BIS), 18% of central banks are considering launching their own CBDCs in the near future. This surge in interest signifies the growing recognition of the transformative potential of digital currencies in reshaping financial systems, and perhaps a perceived threat from cryptocurrencies such as Bitcoin creating alternative financial systems.

In the midst of this global trend, several nations have already taken concrete steps toward CBDC adoption. Just last week, the Republic of Palau’s CBDC made headlines by launching a pilot program for a USD-backed stablecoin on XRP Ledger technology. This move demonstrates the growing appeal of blockchain-based solutions for central banks looking to harness the advantages of digital currencies in their economies.

Also last week, both Russia and Pakistan announced their plans to pilot their own digital currencies within the next 12 to 24 months.

Amidst this backdrop of accelerating CBDC adoption, the Bank of Korea has begun to start taking CBDC development seriously. The central bank has chosen three regions – Jeju, Busan, and Incheon – as candidates for its “private target CBDC test bed.” These selected regions will undergo regional closed tests, simulating the issuance and distribution mechanisms of the current local currency schemes within South Korea.

The Bank of Korea’s ultimate goal is to select one of the three regions for further experimentation with CBDC payments and distribution on a public level. Additionally, the bank aims to secure the participation of franchises and businesses willing to accept CBDC payments, fostering widespread adoption and usage.

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The electronic wallet app that will be used in the CBDC pilot is intended not only for local residents but also for tourists visiting the region.

Read and learn more about central bank digital currencies (CBDCs):

• BIS Survey: 18% of Central Banks Will Issue CBDC in “Near Term”
• The Potential Risks of CBDCs: Cato Institute Calls for Congress to Prohibit Digital Dollar
• Pakistan’s Central Bank Takes Cautious Approach Towards CBDC as Global Adoption Accelerates
• Digital Euro Association calls for strong privacy protections in CBDC development