The Bank of Korea is closing in on a choice for a pilot venue for its forthcoming central bank digital currency (CBDC). Previous reports indicated Seoul as a potentially highly-favoured location, however, the tides seem changed with the capital no longer in the run. The likelihood of Busan, Incheon, or Jeju becoming the pilot location is increasing substantially.
CBDC pilot entails rigorous collaboration between the bank and franchises to facilitate CBDC payments followed by evaluations on a public scale. This initiative is set to kick its testing phase into gear next year, with factors such as local economy impact and user numbers guiding final decisions on the location.
A notable point of discussion among commercial banks in South Korea has been the logistic challenges of Busan as a test location considering its vast population. Consequently, Jeju, boasting the next most significant population, has taken the lead in estimations.
Interestingly, the CBDC electronic wallet application aims to engage not only local residents but tourists as well. With affiliations to large market distribution companies, implementation scope could be substantial. However, the Bank of Korea reveals that the customer test is underway without any interruptions.
Each region, Jeju, Busan, and Incheon, presently issues its local currency; ‘Tamnaneunjeon’, ‘Dongbaekjeon’, and ‘Incheon e-Eum’ respectively. Similar to this approach of local currency issuance, the CBDC tests will primarily serve to evaluate distribution at a local level.
However, juxtaposing these two models uncovers some glaring disparities, specifically major technical challenges CBDC needs to surmount. Despite these impending challenges, stakeholders within the IT industry remain largely optimistic. They believe that the Bank of Korea’s incoming large-scale retail payment system project will result in a surge in demand for IT personnel, causing a significant movement of resources within industry giants and related companies.
Planned expansion of the applicable areas of the project based upon test results has been slated by BOK. The bank is also known to be exploring collaborations with KEB Hana Bank for the CBDC pilot and stablecoin alternatives. Continual industry-related research investments by Hana and BOK’s industriousness and partnership with commercial banking partners for its CBDC points to an evolving climate ripe for growth in the crypto-sector.
However, it is imperative to remember that, given the novelty of such projects, many challenges are bound to arise and the ultimate success of the project, while promising, is not a given.
Source: Cryptonews
