In Brief:
- The South Korean central bank finished the first phase of the CBDC mock test in December 2021.
- The bank tested the issuance and distribution of CBDCs in this phase.
- The second phase will be completed by June and the launch will be after discussion with the authorities.
The Bank of Korea has announced it has completed the first phase of the mock test of its CBDC(central bank digital currency).
According to a report, the South Korean central bank actually completed the test in December 2021,Â
During that stage, the central bank looked into the most fundamental functions of CBDC, such as issuance, distribution in a cloud-based virtual environment, and production.
Phase 2 of the CBDC pilot would introduce real-world features like cross-border remittances, retail payments, offline payments, and will include personal information protection enhancement technologies in the test.
The bank anticipates that the project will be completed in June of this year. Later, it plans to meet with Korean authorities to discuss the CBDC’s actual launch and commercialization.
The central bank intends to conduct a thorough evaluation of the project and to continue usability tests in collaboration with monetary authorities after the second phase test.
According to data from the Atlantic Council, 91 countries are currently developing their own digital currency, with only 14 countries having reached the pilot stage.
Despite the fact that it is one of them, the Bank of Korea warned that such a financial product could have unintended consequences. Those may be fully revealed when the CBDC is officially launched, according to the entity.
The bank has been working on this project since 2020. Bank of Korea chose Ground X, a blockchain subsidiary of the nation’s tech juggernaut Kakao to build the CBDC pilot platform in July 2021.
A lot of authorities are still skeptical about CBDCs and their possible effects on the economy. Recently US congressman Tom Emmer proposed a bill to prohibit the Federal Reserve from launching CBDCs. Emmer criticized the Fed’s CBDC rollout as being overly centralized, leaving users’ info vulnerable to attack.
