South Korea’s central bank is gearing up to launch a real-world transaction test for its central bank digital currency (CBDC) this month. The pilot program will involve 100,000 consumers and seven banks, marking a significant step toward the country’s digital currency adoption.
According to local news outlets, the Bank of Korea (BOK) is collaborating with the Financial Services Commission and the Financial Supervisory Service to execute this pilot. The participating banks, including major financial institutions such as KB Kookmin, Shinhan, and Hana Bank, will issue deposit tokens based on CBDC. These tokens can be used by consumers to make payments at merchants, including 7-Eleven, Kyobo Book Centre, and the popular delivery app Ddaenggyeoyo.
Testing Framework and Timeline
The test is expected to run for approximately three months, though a spokesperson from the BOK has noted that the timeline could be pushed to April due to the complexities of coordinating with multiple institutions. Consumers participating in the pilot will be able to apply for deposit tokens with a limit of 1 million won (approximately $688) and will conduct transactions using QR codes.
South Korea’s CBDC Development Journey
South Korea has been working toward a large-scale CBDC implementation for some time, though the project has faced multiple delays. Crypto.news first reported on the pilot in November 2023 and later in November 2024, highlighting the government’s intention to integrate digital currency into the financial system. In 2024, the Financial Services Commission (FSC) announced plans to incorporate a digital voucher management platform within the pilot, which would allow the government to distribute and track vouchers effectively. However, no definitive timeline has been given for this feature.
Government’s Vision for Digital Currency
The Bank of Korea has expressed interest in replacing traditional cryptocurrencies with its own controlled digital solutions. South Korea is known for its highly active crypto trading environment, with significant public interest and investment in blockchain technology. The government, along with major enterprises and startups, continues to explore ways to integrate blockchain technology into its financial ecosystem while maintaining regulatory oversight.
The upcoming CBDC pilot represents a crucial milestone for South Korea’s digital financial infrastructure. If successful, it could pave the way for a broader rollout, further integrating digital currencies into everyday transactions while offering the government more control over financial activities.
