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BOK to virtually test distribution of digital currency next year

Oct. 7, 2020 - 15:05 By Jung Min-kyung
Bank of Korea headquarters in central Seoul (Yonhap)
South Korea’s central bank said Wednesday that it plans to start testing the distribution of its digital currency next year.

The Bank of Korea announced in April that it had launched a 22-month pilot program that would run through December 2021.

According to the BOK, the distribution and circulation test is the final part of the three-step pilot program. Phase 2, which focuses on analyzing related processes and seeking outside consulting, started recently. Phase 1, designing and checking the technology, ended in July.

In phase 3 the BOK will distribute the digital currency and oversee its circulation process.

Blockchain technology will be used to keep track of digital currency transactions.

The central bank has reiterated that the pilot program is not confirmation that it will launch an actual digital currency, and it is merely testing the waters.

Compared with its global counterparts, including the People’s Bank of China, the BOK has maintained a lukewarm stance toward the matter of a central bank digital currency. It even dissolved a special cryptocurrency research team in January last year, but decided to revisit the issue earlier this year.

The Chinese central bank has already used $162 million worth of its CBDC for its pilot transactions. Its digital currency system has been undergoing tests for much of the past year in major cities such as Shenzhen and Xiongan, according to the South China Morning Post earlier this week. It added that Beijing wants to keep a tight grip on CBDC development and use it “as a tool to hasten the transformation of the country’s economy.”

The coronavirus pandemic is accelerating global CBDC development, with more and more people turning to contactless and cashless payments.

By Jung Min-kyung (