Digital Won! South Korea's central bank announces schedule for issuing central bank digital currency to adapt to changes in the future payment environment

The Bank of Korea (BOK), South Korea's central bank, announced today that the country will launch a pilot program for a Central Bank Digital Currency (CBDC) issued by the central bank to examine the feasibility of issuing such currency on a technical and legal level in response to the changing payment environment in the future.

Early Experimentation to Address Environmental Changes

According to a press release by the Bank of Korea today, in order to promote inclusive finance, developing countries such as Ecuador and Uruguay have been promoting the development of CBDCs, while Sweden and China have been actively preparing to issue CBDCs in response to changes in the payment environment and the use of private currencies. Although the United States and Japan have not yet revealed plans to issue CBDCs, the Bank of Korea must still conduct early research in this situation. The Bank of Korea stated in the press release:

“The demand for paper cash still exists in the current market, and the possibility of issuing CBDC in the short term remains low. However, considering the competitive payment service market and high level of financial inclusivity, it is indeed necessary to take relevant measures to prevent rapid changes in domestic and foreign markets.”

Pilot Program to Last 22 Months

The Bank of Korea's digital currency pilot program was launched last month and is scheduled to be completed by the end of next year. This research is being conducted by the Digital Currency Research Group and Technical Group established in February at the Financial Settlement Bureau, with close exchanges and cooperation with central banks of other countries. In addition, to review the relevant regulations, the team also plans to operate a technical and legal advisory group composed of internal and external experts to clarify the necessary technologies and legal regulations required for creating and issuing new digital currencies.

The Bank of Korea's digital currency is expected to complete its initial planning from March of this year to January of next year, and is scheduled to undergo a pilot test lasting a whole year in 2021. Apart from this, not much has been disclosed about the design details and scope of application of this central bank digital currency.

Related Reading

• IMF Predicts Central Banks Will Issue Digital Currency CBDCs
• Nordic Countries Moving Towards Cashless Societies, Sweden Continues CBDC Experiments, Finnish Scholars Not Optimistic

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