South Korea looking to test out CBDCs?
- The Bank of Korea has launched a pilot program to assess the logistics of the issuance of a central bank digital currency (CBDC).
- The bank made it abundantly clear that it has no plans of launching a CBDC anytime soon.
- The pilot program will ensure the bank is prepared for the launch if it becomes a necessity for it to do so.
The Bank of Korea recently announced the launch of a pilot program to test the logistics of rolling out a central bank digital currency (CBDC). Though the South Korean central bank does not have immediate plans to launch such a currency, the pilot program will ensure that the country is prepared to do so in the light of changing market conditions.
In February, theoretical research was conducted on the same. The pilot will entail a technological and legal review of CBDC issuance. It began in March and is planned to run till December 2021. The initial phase is aimed at defining the requirements and design of the CBDC, which will run till July 2020. In July and August, a review of the technology required to implement the currency will take place. After this, there will be an analysis of business processes, lasting until the end of this year. Lastly, the whole of 2021 will witness a 12-month build and test of the CBDC pilot system.
The announcement emphasized that the country has no plans to launch a CBDC anytime soon.
The need to issue a CBDC in the near future still remains slim when considering the demand for cash that still exists, the competitive payment service market and high-level financial inclusion, but there is a need to be able to quickly take steps in case market conditions at home and abroad change rapidly.
Author
Rajarshi Mitra
Independent Analyst
Rajarshi entered the blockchain space in 2016. He is a blockchain researcher who has worked for Blockgeeks and has done research work for several ICOs. He gets regularly invited to give talks on the blockchain technology and cryptocurrencies.
