South Korea Authorizes CBDC Pilot Test with Seven Banks

CBDC South Korea

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Jimmy Aki

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Jimmy Aki

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Jimmy has nearly 10 years of experience as a journalist and writer in the blockchain industry. He has worked with well-known publications such as Bitcoin Magazine, CCN, and Blockonomi, covering news...

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Last updated: 

November 6, 2024

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South Korea’s Financial Services Commission (FSC) recently approved a pilot program allowing seven major banks to explore digital financial services with central bank digital currency (CBDC), looking to replace traditional vouchers with a mobile-friendly system.

This initiative, in collaboration with the Bank of Korea and the Ministry of Science and ICT, seeks to offer citizens easier access to benefits through CBDC-based tokens.

CBDC Pilot Test to Evaluate Digital Voucher Replacement Potential

A memorandum published on November 6 detailed the involvement of seven South Korean banks—Kookmin Bank, Shinhan Bank, Woori Bank, KEB Hana Bank, the Industrial Bank of Korea, BNK Busan Bank, and Nonghyup Bank—in the CBDC pilot program.

These banks will work together to implement a CBDC system and a digital voucher management platform, allowing the public to experience these new digital services firsthand.

The test seeks to determine whether CBDC-based deposit tokens can effectively replace traditional vouchers, which are often carried in physical forms like paper or cards.

By enabling access to vouchers directly on mobile devices, the CBDC system is expected to simplify transactions and reduce the reliance on physical wallets.

Features like QR code payments will make the process even more convenient, potentially reshaping how public benefits are accessed.

A specialized task force, the CBDC Usability Test Preliminary Inspection Team, will closely monitor the project to ensure that participating banks meet required standards and comply with regulatory guidelines.

South Korea Pursues Digital Currency Leadership Through CBDC Pilot

South Korea’s proactive approach may strengthen its role as a pioneer in digital finance, with the CBDC pilot test program potentially offering valuable insights for other countries considering similar digital solutions.

This pilot program aligns with a growing international trend, as many nations pursue their own CBDC initiatives.

For instance, countries such as Bahrain, Georgia, Saudi Arabia, and the UAE are already in the proof-of-concept phase for their CBDCs.

Kazakhstan is among the frontrunners, having advanced to two pilot programs for the digital tenge.

Even the United Kingdom is exploring the idea of a digital pound, referred to as “digital sterling,” as it looks to compete with the rise of private sector digital assets and cryptocurrencies.

If successful, South Korea’s CBDC pilot test program could encourage other governments to adopt similar digital methods for distributing public services, potentially enhancing efficiency and security across various sectors.