The Bank of Korea is moving forward with its CBDC project and plans to pilot its digital KRW with a group of 100,000 citizens later this year. The central bank aims to test the usability and deposit functions of the digital currency at the end of 2024. It announced plans to launch CBDC usability tests in October last year in collaboration with the nation’s top regulators, the Financial Services Commission and the Financial Supervisory Service. The bank will build a pilot CBDC network and issue three types of tokens based on institutional CBDC models.
Real-time transaction tests with ordinary citizens are set to begin in 2024, with test subjects using the CBDC in commercial settings. Critics argue that a South Korean CBDC launch could negatively impact the country’s growing fintech and banking sectors. Professor Seo Ji-yong of Sangmyung University believes that CBDC commercialization will take time in South Korea and that private companies may need to prepare corresponding projects as the project progresses. Some of the nation’s biggest tech firms and banks have already started CBDC operations in anticipation of the launch.
In Russia, financial analysts have suggested that the domestic retail sector will benefit the most from the adoption of a digital ruble, while the banking sector could potentially lose around $536 million per year. However, a BOK official reassured the private sector that the central bank is not looking to compete with existing industries but rather aims to provide new innovative services and opportunities for industrial development. The official mentioned that by using the CBDC, merchants could reduce fees compared to existing card transactions, which could benefit retailers.
The South Korean Central Bank is set to undertake real-world tests of its CBDC project starting in the fourth quarter of the year. The bank plans to issue both deposit-style tokens and e-money tokens as part of the pilot network. The upcoming tests will involve ordinary citizens using the digital KRW in various commercial settings. While some critics have raised concerns about the potential negative impact on the fintech and banking sectors, the central bank is moving forward with its plans and aims to provide new and innovative services through the CBDC.
As the digital KRW project progresses, the private sector is expected to respond by preparing corresponding projects to complement the central bank’s initiative. The goal of the CBDC project is to improve the efficiency and accessibility of transactions, with the potential to reduce fees for merchants compared to existing payment methods. Despite concerns raised by critics, the Bank of Korea is committed to ensuring that the commercialization of the CBDC will not pose a risk to other industries but rather provide opportunities for industrial development. Retailers and the domestic retail sector are expected to benefit the most from the adoption of CBDCs, while the banking sector may need to adapt to the changing landscape brought about by digital currencies.
