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South Korea to Launch Digital Currency Pilot with 100,000 Participants in Late 2024

Updated: Jan 5

South Korea is set to embark on a digital currency pilot project in late 2024, with 100,000 citizens participating in the experiment.

South Korea
South Korea

The initiative, jointly operated by the Bank of Korea (BOK) and financial authorities, aims to address challenges associated with existing government voucher systems.

Under the pilot program, selected individuals will be able to purchase goods using deposit tokens based on the country's central bank digital currency (CBDC). This system is expected to tackle issues such as high transaction fees and fraudulent claims that have plagued traditional voucher systems.

The plans for the pilot project were announced following a visit by Agustin Carstens, the general manager of the Bank for International Settlements, to the BOK. The program builds upon an earlier announcement made in October, which outlined the central bank's intention to conduct real-world experiments with CBDC.

During the pilot, commercial banks will issue deposit tokens in the form of CBDC, allowing participants to make purchases similar to using a voucher at stores. The recruitment of participants will take place between September and October of the following year, with the project running for three months.

The Bank of Korea highlighted the potential of digital currencies to overcome the limitations of existing voucher systems, including high transaction fees, slow settlement processes, and concerns over fraudulent claims. However, participants will be restricted to using the currency solely for designated payment purposes, with other uses, such as personal remittance, not permitted at this time.

In addition to the payment aspect, the pilot project will also involve technological experiments to evaluate the feasibility and effectiveness of issuing and distributing these new financial products. The BOK will collaborate with the Korea Exchange to integrate CBDC into a simulation system for carbon emissions trading, testing the viability of delivery versus payment transactions.

The pilot project is scheduled to commence in the fourth quarter of 2024, following consultations with relevant organizations and a review of related laws. The BOK is open to considering separate pilots if banks propose new individual projects.

Agustin Carstens, referring to the project as "digital won," praised the efforts of the Bank of Korea in approaching the future monetary system during his meeting with BOK Governor Rhee Chang-yong.

  • South Korea plans to launch a digital currency pilot project in late 2024.

  • 100,000 citizens will participate in the experiment.

  • The initiative aims to address challenges with existing government voucher systems.

Source: SCMP

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