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South Korea’s CBDC Pilot to Take Place in Jeju, Busan, or Incheon, Excluding Seoul

Sead Fadilpašić
Last updated: | 2 min read
Source: AdobeStock / Nikita

The central Bank of Korea (BOK) has narrowed down the choices for its central bank digital currency (CBDC) pilot venue to three regions. Notably, the nation’s capital Seoul is not among these.

The major regions chosen as candidates are Jeju, Busan, and Incheon, according to IT Chosun. 

Eventually, the bank will choose one of the three. It will then secure franchises that can accept CBDC payments and will start experimenting with payments and distribution at a public level. 

The private test is scheduled for next year. The BOK will select the pilot site after considering the expected number of users and the effect on the local economy.

An official from a commercial bank said that, 

“In the case of Busan, the number of eligible citizens is so large that the Bank of Korea is burdened in many ways, so the opinion was greatly inclined to Jeju, which has the next largest population.”

The bank official argued that the CBDC electronic wallet app will allow local residents, as well as tourists, to join the project.

“We are in contact with distribution companies such as large marts,” they said.

An official from the BOK stated that “the customer test is being well prepared without interruption.”

‘Large Number’ of People and Companies On the Move

The regional CBDC tests will be similar to the issuance and distribution of the local currencies in South Korea, said the report.

Local currencies are issued by local governments and their usage is geographically restricted.

Jeju, Busan, and Incheon are currently issuing ‘Tamnaneunjeon’ (operated by Jeju Bank), ‘Dongbaekjeon’ (operated by Busan Bank), and ‘Incheon e-Eum’ (operated by a consortium of Kona I and Nonghyup Bank), respectively.

However, the report noted, unlike these alternative currencies, CBDC still has many major technical barriers to overcome. 

But, an official from the IT industry was quoted as saying that, 

“As the Bank of Korea is planning a large-scale retail payment system project soon, it is in need of an exceptionally large number of IT personnel.  A large number of related personnel, including large companies, are on the move.”

It’s expected that the BOK will gradually expand the scope of applicable areas based on the results of the test.

Meanwhile, as reported, KEB Hana Bank is set to work with the BOK on the CBDC pilot and stablecoin alternatives, such as tokenized deposits. 

Hana has been investing in crypto sector-related research, while the BOK, on its part, has been working with a number of commercial banking partners on its CBDC.

The central bank has been working on the project since at least 2020: it has finished its first and entered the second phase. 

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Learn more:

South Korea Ready to Test its CBDC with Commercial Banks, But Says Launch Is ‘Long Way off’
S Korean MPs to Create Law that Distinguishes CBDCs from Crypto

Samsung and Bank of Korea Partner for In-Depth Offline CBDC Payments Research
S Korea Claims Cross-border CBDC Success