According to a report published on Monday, the Bank of Korea completed the first phase of the simulation project of a central bank digital currency (CBDC) in December 2021.
The Bank of Korea has completed the first phase
The South Korean central bank said that the first phase of its CBDC simulation test was completed in December, while the second phase is currently underway. The first phase of the mock test covered some of the essential functions of the sovereign digital currency, such as distribution and issuance. The second phase of the central bank digital currency (CBDC) pilot will test real-world functions such as cross-border transfers, retail payments, and offline payments.
The Bank of Korea (BOK) would like to include financial institutions in the second phase, similar to China’s current digital yuan. However, unlike China, the digital currency issued by BOK would also consider user privacy. After completing the second phase in June this year, the bank plans to conduct a comprehensive evaluation of the project and further experiments on usability in cooperation with financial institutions.
South Korea is at the forefront of innovation
The Bank of Korea has been working to establish a CBDC pilot since at least 2020. In July 2021, the bank selected Ground X, a blockchain subsidiary of South Korean tech giant Kakao, to build the CBDC pilot platform. According to the data of Atlantic Council, 91 nations are currently working on their sovereign digital currency, and South Korea is one of the 14 nations that have reached the pilot phase.
South Korea has emerged as one of the leading crypto nations in recent years and recently announced its plans to become a leader in the metaverse as well. While China is currently at the top of the CBDC game, many European and Asian countries have accelerated their development plans to keep up with its pace.