What Can We Expect from South Korea’s CBDC Pilot in 2024?

South Korea, known for its thriving cryptocurrency advancements, has recently introduced significant public legislation to benefit its citizens. This initiative, known as the Central Bank Digital Currency (CBDC) pilot program, seeks to modernize the country’s monetary system and tackle various financial challenges.

Why the CBDC Pilot Program?

South Korea has introduced the Central Bank Digital Currency (CBDC) pilot program in response to the need to modernize its monetary system. The program addresses various issues in the current financial landscape, such as high transaction costs, delayed settlements, and concerns about fraudulent claims. By exploring the potential of digital currencies, the government hopes to provide more efficient and secure payment options for its citizens.

How the CBDC Pilot Program Works?

The CBDC pilot program in South Korea allows 100,000 selected citizens to use deposit tokens issued by commercial banks for making purchases. These tokens resemble store vouchers and are intended to serve as a digital alternative to traditional payment methods. The program will run for three months, with commercial banks recruiting participants in September and October of the following year. Technological trials will also assess the feasibility and efficiency of integrating CBDC into various financial systems, including carbon emissions trading.

When Will the CBDC Pilot Program Take Place?

The CBDC pilot program is scheduled for the fourth quarter of 2024. Before its implementation, discussions with relevant organizations and examining relevant legislation will be conducted to ensure a smooth and legally compliant rollout. This timeline provides ample preparation and planning for the successful execution of the pilot program.

General Manager of the Bank for International Settlements, Agustin Carstens, has referred to the project as the “digital Won” and expressed favorable views on South Korea’s efforts to address the future of its monetary system. Additionally, officials from the Bank of Korea have indicated a willingness to consider new individual projects proposed by banks in the future, suggesting a commitment to ongoing innovation in the financial sector.