One might infer a sense of intrigued anticipation as the South Korean central bank, BOK, carves its path towards the “real-world” Central Bank Digital Currency (CBDC) pilot, scheduled for the final quarter of FY2024. A strategic alliance designed to bolster the advancement of its CBDC, they’ve joined forces with South Korea’s leading financial regulators, namely FSC and FSS.
Their proposed blueprint outlines an inclusive setup, where the prototype will be accessed by the general public for daily transactions – a crucial step mirroring the reality of its application in the retail space. Before moving towards the retail version, the BOK is steadfast in its determination to undergo rigorous testing on a wholesale (or institutional) CBDC model. The prototype resembles a conventional token, issued by the central bank, primarily utilized within financial and banking sectors.
The emphasis on the wholesale CBDC isn’t a mere consequence of a coin flip – it speaks volumes about the intention of the BOK. This model plays a pivotal role in streamlining the South Korean inter-bank settlements process. On the contrary, retail CBDCs function as a viable substitute for cash or debit cards, in real-world payments.
In its voyage through uncharted waters, BOK will synchronize its efforts with domestic banks for its wholesale CBDC trials. The intertwined work of discarding physical money with the creation of digital tokens will be facilitated on the central bank’s platforms. To safeguard their progress, technical assistance will be outsourced from the BIS. This organization is an established advocate for CBDC interoperability, adding a layer of assurance to the venture.
While the strides towards this digital shift are significant, the BOK’s formal viewpoint holds an aura of uncertainty, specifically concerning the issuance of a CBDC. The bank’s disclosure states it is yet to determine its inclination towards endorsing a digital won. Stating clearly, that carrying out the pilot proffers a glimpse into the optimal CBDC structure that harmonizes with South Korea’s financial landscape, it in no way implies the pursuit of a full-scale CBDC introduction.
With November’s end as their targeted period, further details – inclusive of participating banks – will be revealed, thereby adding more texture to the unfolding tale of South Korea’s exploration into the world of digital currency.
Source: Cryptonews
