TLDR
- South Korea launches the CBDC test with 100,000 consumers as early as March 2025
- Seven banks including large commercial banks will issue deposits worth up to 1 million won
- Consumers will use electronic wallets to make purchases in convenience stores, bookstores and delivery apps
- The three -month test aims to check the issuance of tokens, consumer purchases and trade payments
- Global institutions that BIS looks at the test results with interest when CBDC experiments expand all over the world
South Korea is set to start a major test of Central Bank Digital Currency (CBDC) involves 100,000 financial consumers. The test can start as early as this month, according to a bank of Korea official.
The test enables consumers to use deposits issued by commercial banks based on CBDC. These symbols can be used to buy goods at various merchants, including convenience stores and cafes.
Seven banks participate in this test. They include the five major commercial banks in Korea: KB Kookmin, Shinhan, Hana, Woori and NH Nonghyup. Industrial Bank of Korea and Busan Bank will also join the program.
Bank of Korea has been studying CBDC since 2021. This real test was first planned for late last year but was delayed to coordinate with all institutions involved.
The test will check if three capital stages will work smoothly. First, the banks will issue deposits with digital coupon features. Then consumers will use these symbols to buy items in stores. Finally, payments are sent to the merchants.
Consumers who join the test can apply for deposit tokens from their bank. Each person can get tokens worth up to 1 million won (about $ 750 USD). They will use electronic wallets to view QR codes at payment locations.
Merchants accepting digital symbols
Several merchants have already agreed to accept these digital symbols. They include the 7-eleven convenience store chain, Kyobo Book Center and the food delivery app “Ddaenggyeoyo.” The program “Seoul Youth Culture Pass” will also accept tokens.
Bank of Korea has prepared for this test by expanding its team. This has created a new research office for digital currency and added more staff to manage CBDC projects.
The test will be run for about three months. If things are going well, can talk about officially introducing a CBDC in Korea can move forward faster. However, Korea’s bank will need to review the results carefully to check how useful and secure the system is.
Other countries
Other countries are looking at Korea’s test with interest. The European Union, which works with its own CBDC plans, is aware of the results.
In November 2023, when Korea announced this test, Cecilia Skingsley from Bank for International Settlements (BIS) said that the world would look at. She noted that it would be valuable to learn from CBDC projects in developed digital economies like Korea.
BIS is an organization that helps central banks work together. Its interest shows how important Korea’s test can be for the global development of digital currency.
An official in the Bank of Korea explained some benefits of CBDC.
“If CBDC is introduced, payment services will be improved, resulting in lower transaction fees and better financial inclusion,” said the official.
The same official also noted possible challenges. “As a new technology, there may be limits when it comes to practice and security,” they said. The bank plans to make improvements based on what they learn from this test.
This test so far represents one of the largest real CBDC studies. With 100,000 users and several banks and traders involved, it will provide valuable information about how digital currencies can work in everyday life.
