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Policy

South Korea's Central Bank to Test Digital Currency in 2021

The Bank of Korea is to run virtual trials of a possible central bank digital currency through 2021.

By Daniel Palmer
AccessTimeIconOct 7, 2020 at 9:17 a.m. UTC
Updated Sep 14, 2021 at 10:05 a.m. UTC
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The Bank of Korea (BoK) is to run trials of a possible central bank digital currency (CBDC) through next year.

  • As reported by The Korea Herald Wednesday, the move follows the progress of research to the technical phase in the summer and will see testing of distribution and circulation of the digital coin.
  • With China fast moving toward the launch of its CDBC and having already held tests across the nation assisted by banks and firms, South Korea moved to accelerate its work on a CBDC in April.
  • The BoK reportedly said the tests do not necessarily mean it will go ahead with the CBDC launch.
  • Originally saying it saw no need for a CBDC, the central bank has quickly shifted gear on the project: Phase one – designing and reviewing the technology – was completed in several months and phase two – looking at the likely infrastructure with an outside partner – started at the end of August.
  • While China has been testing its digital yuan with other entities, the BoK will test the blockchain-based CBDC in a virtual environment initially, said The Herald.
  • According to the Korea Times, the BoK said it will simulate transactions on a blockchain platform that would be similar to those for cash or traditional means of payment.
  • "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," an official said.
  • In June, the central bank formed a legal committee to advise on the possible launch of the digital currency.
  • Edit (14:20 UTC, Oct. 7 2020): This article previously stated that the BoK tests would be held in conjunction with banks, as per the Korea Herald report. This has now been corrected after the Herald amended its article.

Also read: Inside the Estonian CBDC Experiment That Could Shape the Digital Euro

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