South Korea Ready to Test its CBDC with Commercial Banks, But Says Launch Is ‘a Long Way off’
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South Korea’s central Bank of Korea (BOK) says it is now ready to commence “real-world” testing for its prototype digital won – but is refusing to say whether or not it actually intends to roll out the token.
Aju Kyungjae reported that 10 domestic commercial banks have already announced their intention to participate in the next stage of the BOK’s central bank digital currency (CBDC) pilot. As of late last year, the BOK has been conducting behind-closed-doors tests with private sector firms including subsidiaries of the internet giant Kakao.
But the BOK has stated that in the “second half of the year,” it wants “major domestic commercial banks” to join the testing process.
This next part of the multi-stage pilot, the bank said, will focus on remittance and payments in real “financial service environments.” As such, the BOK has sent most of the nation’s banks a letter asking for help. The 10 that have already signaled they are keen to work with the BOK include the banking giants Shinhan Bank and Nonghyup (NH) Bank.
The BOK also briefed banks on its digital KRW progress late last month.
The central bank wants to know whether its digital KRW prototype is compatible with various banks’ IT platforms and wants to investigate possible interoperability-related issues.
The BOK will then follow up this (final) stage of testing with a comprehensive report that it wants to share with overseas “central banks and international financial organizations.”
However, the report noted, the BOK still considers that it should take a “cautious attitude” toward digital token issuance. And even if the digital won proves to be usable, “it is expected that it will take a considerable amount of time before it is actually introduced,” per the report.
It added that a “social consensus” on a digital currency rollout would be needed prior to launch, while the BOK also wants time to “ensure” its token’s “technical stability against cyber attacks.” Security-related matters, it added, are “also not problems that can be solved in a short period of time.”
Aju Kyungjae quoted a spokesperson at the BOK as stating:
“Even if we complete our research into a CBDC, it will take a long time [for us to] actually launch it.”
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