The central Bank of Korea (BOK) starts a “real-world” CBDC (central bank digital currency) testing of its digital KRW prototype. But it also clarifies that an official CBDC launch has a long road to travel to reality.
The BOK wants to explore compatibility and interoperability issues, if any, of its digital KRW prototype, with Korean banks’ IT platforms. In the final CBDC testing stage, the BOK would prepare a detailed report to share with “central banks and international financial organizations” abroad.
Aju News reports 10 domestic commercial banks of South Korea are eager to participate in the BOK’s CBDC pilot. In “second half of the year,” the BOK intends to actively involve the “major domestic commercial banks” in the CBDC testing.
But the BOK, in finalizing the issuance of a digital KRW, is moving ahead with a “cautious attitude,” per reports. The BOK admits that its CBDC “will take a considerable amount of time before it is actually introduced,” despite its potential usability.
The BOK wants to duly factor in a “social consensus” in introducing a digital KRW as a CBDC. It wants to ensure “technical stability against cyber attacks.” The BOK believes security issues are “not problems that can be solved in a short-period of time.”
Since 2021, the BOK has been testing CBDCs in partnership with private entities, such as Kakao, a major internet company. The forthcoming CBDC multi-stage pilot testing phase would revolve around remittance and payments in the actual “financial service environment.”
Among those Korean banks willing to assist the BOK in its CBDC testing are Shinhan Bank and Nonghyup Bank.