South Korea’s Central Bank to Test Digital Won Distribution In 2021; CBDC’s Are Gaining Momentum
The Central Bank of South Korea has announced that it will commence the distribution phase of its CBDC next year, marking the final stretch of the 22-month scheduled initiative. First reported by the Korea Herald, the Bank of Korea (BOK) intends to run the distribution of its blockchain-based CBDC up to December 2021. This will allow the BOK to assess its CBDC performance in a virtual environment.
As earlier reported by BEG, the ‘digital won’ recently entered its second phase, which involves consultation with industry stakeholders to build a sustainable CBDC infrastructure. Now that the BOK has confirmed the distribution phase slated for next year, Korea’s digital won could soon be a practical CBDC just like China’s DC/EP. An official from BOK has, however, said that the monetary body will not involve 3rd parties yet,
“The CBDC will be issued and circulated in the virtual world, and we are going to test a number of transaction scenarios under a variety of circumstances.”
Korea, which embarked on intensive CBDC research earlier in the year, appears to be on track with its milestone timelines. BOK completed the first phase, ‘designing & reviewing’ in July, and has since accelerated efforts into the ongoing phase two. Given this pace, the country might as well muscle out with already piloted CBDCs not limited to the ‘digital yuan.’ However, the BOK has previously signaled that it is not looking to launch a CBDC, but hedge should these digital assets become popular soon.
While South Korea’s progress is laudable, China still dominates the CBDC race, having piloted the PBoC backed digital RMB back in April. It was initially rolled out in four test cities but has since been scaled to prominent Chinese cities, including Beijing and Hong Kong. Many jurisdictions, including the European Union, are now looking to follow China’s lead in the CBDC space; the EU recently applied to trademark ‘digital euro’.