The Bank of Korea (BOK) is getting one step closer to developing a central bank digital currency by preparing to launch a pilot platform, Reuters reports.
The Bank of Korea will conduct tests that simulate internal banking transactions such as opening savings accounts and transferring funds. It will also focus on mobile payment transactions.
South Korea Prepares for Changes
A Korean Bank official claims a significant decrease in cash payments. And that’s why he claims that quick changes are needed when it comes to payments:
“The steps we are currently taking are preparations to keep up with the rapidly evolving changes in the payment settlement system.”
According to reports, South Korea’s central bank is planning a trial test of the functionality of a central bank digital currency (CBDC). The main purpose of this test is to check whether CBDC can provide settlement and remittance services for the purchase of goods and services. The country is currently looking for a partner to test the digital won.
Tests will begin in August 2021 and end in June 2022. The bank has voiced aspirations for CBDC in the past, but this is the most important step to date.
The Bank of Korea also stressed that it does not intend to issue the digital currency. The purpose of the trial study is to only check the applicability and effectiveness of a CBDC for now.
South Korea is making great strides towards the implementation of cryptocurrencies and related technologies. The country is one of the most tech-savvy countries in the world and its citizens are already familiar with the cryptocurrency market. With this latest development, the country is now taking its economic digitization efforts to the next level.
South Korea Follows China and Others
CBDCs of countries such as China and Sweden are currently in the trial phase, while the US Federal Reserve is preparing to publish a research report on the digital dollar this summer.
China has pilot programs for the digital yuan in many major cities, all of which have been quite successful. Citizens of the country already frequently use digital wallets for daily payments, and CBDC is a natural evolution of this process. The government is expected to launch CBDC at the end of the year.
On the other hand, Sweden is a country that is just entering the digital presence space. In recent months, the country has stepped up the e-Krona initiative and a date of up to five years has been set for its completion. The country is known to be willing to launch the asset, even if the launch of the e-Krona takes longer than expected.