South Korea’s central bank announced that it would choose a technology supplier to build a pilot platform for digital currency and move closer to generating central bank digital currency.
S.S.Korea bank seeks to choose technology suppliers through an open bidding process. The supplier will research the practical launch of CBDC in the test environment. The test will run from August to December and involves simulation of banks and retail outlets. The trail will include payment via mobile phone, payment, fund transfer, and deposits.
The Bok said that the latest move comes in response to fast change in the global financial system, stating, “The share of a cash transaction is decreasing significantly. The steps we are taking now are to prepare for the changes in the payment settlement system changing rapidly.”
To prepare for the CBDC, Seoul-based Shinhan Bank initiated a pilot program in March with LG CN. The bank still needs an intermediary agent to distribute a digital won and promote its use in the country.
Also Read: The Federal Reserve To Release Research Paper On U.S CBDC
The Bank of Korea also clarified earlier this year that CBDCs are fiat currencies and not virtual currencies. In other words, CBDCs are merely digital versions of fiat currencies that are based on Distributed Ledger Technology.
That has been one of the primary criticisms of CBDCs, i.e., they come with the same shortcomings of fiat currencies, but that has not stopped R&D.
Several countries are now well underway with their CBDC projects, and 2021 will be a landmark year. Central banks representing one-fifth of world’s population are likely to issue their own digital currencies in next 3 years. Central banks from countries like China, Britain, and Sweden are already looking forward to developing digital currencies to modernize their financial systems.
