Yello Paradisers! South Korea is making waves in the digital currency realm. The Bank of Korea (BOK) is set to launch a pilot project, delving into the technical infrastructure of a potential central bank digital currency (CBDC).
???? Collaborative Endeavor
The CBDC pilot is a joint initiative between the BOK, the Financial Services Commission (FSC), and the Financial Supervisory Service (FSS). Announced on Oct.4, the project aims to assess the feasibility of a monetary system anchored on “wholesale CBDCs.”
???? Key Participants
The pilot will encompass both private banks and public institutions. Lending its technical prowess to the project will be the Bank for International Settlements (BIS).
???? Phases of Testing
The BOK has outlined plans to test both retail and wholesale versions of the CBDC. In the wholesale model, banks will tokenize their deposits, circulating them within a network supervised by the BOK, FSC, and FSS. The live testing phase for the retail CBDC is anticipated to kick off post system setup in Q4 2024.
???? Looking Ahead
While the BOK has emphasized that the pilot doesn’t necessarily translate to a full-fledged implementation, optimism is in the air. Lee Myung-soon, the First Deputy Governor of the FSS, perceives the pilot as a monumental step towards envisioning the future monetary system. This sentiment resonates with views expressed by Denis Beau, the first deputy governor at Banque de France, earlier in September.
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