The pilot program, spearheaded by the Bank of Korea (BOK), will involve the issuance of a deposit token, effectively a digital version of the Korean won, to selected participants.These individuals will be able to utilise the digital currency for payments at participating merchants, providing insights into user behaviour and acceptance of the CBDC. A few commercial banks will be a part of the pilot program. These banks will choose participants sometime in September 2024 and the project will then run for the next three months.
Why is South Korea testing digital currency?
The BOK has outlined several objectives for the pilot program, including assessing the feasibility and effectiveness of issuing and distributing a CBDC, evaluating its impact on the financial system, and exploring its potential applications beyond payments. The findings from the pilot will inform the bank’s decision-making process regarding the future of CBDCs in South Korea.
“Following consultations with relevant organisations and a review of related laws, the pilot project will be conducted first in the fourth quarter of 2024. The possibility of conducting separate pilots will be considered as well if banks propose new individual projects,” an official from the BOK was quoted in the report.
For citizens, it is a chance to test a digital currency. However, they will be restricted to make certain kinds of payments at designated merchants only, noted the report.
The BOK will carefully monitor the program’s progress and gather feedback from participants at regular intervals to see the effectiveness of the use of digital currency.