South Korea Launches CBDC Pilot Program Through Significant Partnerships

• The aim of the pilot initiative is to evaluate the technological infrastructure required for a CBDC.
• The Bank for International Settlements has provided its expertise in delivering technical assistance.

In line with the actions of other nations, South Korea has opted to commence a trial program for CBDC. The Bank of Korea (BOK), the Financial Services Commission (FSC), and the Financial Supervisory Service (FSS) recently revealed plans to explore the technological framework of the CBDC.

Significantly, the FSC and the FSS are also involved in this effort, with the Bank of Korea (BOK) taking the lead role. A joint announcement regarding the CBDC pilot program was made on October 4th, representing a significant step forward in the country’s journey towards CBDC.

Collaborative Approach

Furthermore, the primary goal of this pilot initiative is to assess the technological support essential for a CBDC, as well as to evaluate its pros and cons. Notably, it will examine the feasibility of a future monetary system based on “wholesale CBDCs,” or digital currencies designed for use by financial institutions and banks.

The trial program will encompass not only public entities such as universities and hospitals but also commercial banks. Additionally, South Korea has adopted a collaborative strategy for this project. The Bank for International Settlements (BIS) has extended its expertise in providing technical assistance.

At the same time, both retail and wholesale CBDCs will be part of the testing process. Under the supervision of the BOK, the FSC, and the FSS, participating banks in wholesale CBDCs will tokenize their deposits and distribute them across a network.

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