Bank of Korea (Book) has announced a plan to launch a Central Bank digital currency (CBDC) Experiment to evaluate the feasibility of implementing the digital won.
Announces it Planned pilot On March 18, the Central Bank said the CBDC experiment will use real transactions to test the proposed digital currency. Participants will be able to convert their bank deposits to tokens and use them for payments at selected merchants.
Books sees that 100,000 individuals participate in the pilot program but did not mention a proposed expansion to cover a wider demographic. The initiative is scheduled to begin in April and is expected to continue until the end of June.
Apart from measuring public feelings for a CBDC, the book is anxious to explore new settlement standards for commercial banks. Currently, local banks carry out settlements that use reserves with the central bank, but this system has several disadvantages.
The upcoming experiment will test the life force of a CBDC-based settlement system for banks using distributed main book technology (DLT). If things go according to plan, the book will roll out a CBDC and commercial banks can issue tokens linked to it for local payments.
During the pilot phase, consumers will be able to convert their deposits to tokens with the push of a button, a function that the central bank considers before the full commercial launch. However, this function has been criticized for potential banking intermediation and the associated revenue consequences for financial institutions.
Book is aware of the challenges and will meet the amount of tokens that can be held by a participant of KRW1 million (689 US $). Furthermore, the total amount for deposit is convertible during the trial period of KRW5 million (3,446 US $).
The selected merchants include a mix of online and offline companies, including 7-Eleven, Silla University and Hyundai Home Shopping.
“Through the deposit token payments, the merchants can receive decommissioning funds in real time,” said a spokesman for the book. “In addition, related transaction fees are expected to be reduced by minimizing intermediaries in the payment process.”
South Korea has a well -developed local payment ecosystem, with a book studying CBDC since 2020. Last year the government increased efforts through a capital injection of $ 14 million for CBDC research after rising use cases to counteract Stablecoin risks.
South Korea is aimed at international partnership to operate its CBDC experiments. A high profile Partnership with Italy And a number of regional collaborations accentuate a commitment for uniform CBDC standards.
Increases digitization efforts
In other developments, the country’s financial supervisory authority is considering integrating new technologies into its current activity to Improve transparency and improve efficiency.
Financial Supervisory Service (FSS) has rolled out a three -year plan to improve the quality of its supervisory tasks over the financial industry. FSS revealed the plans during the launch ceremony for financial monitoring of digital transformation and looked at full integration until 2027.
“In your digital transformation, FSS must proactively understand the finance industry and the market, systematically respond to risks and actively lead changes and innovation,” said FSS Governor Lee Bok-Hyun.
At present, FSS processes are strongly dependent on physical exertion and are prone to errors and innate human bias. The agency turns into a data -driven body to improve the systems while upgrading to a smart workplace.
Lee says FSS will set up systems to collect data from providers of financial services and companies to operate its Digital transformation.
“We strive to improve the health and stability of the financial market by preparing a multidimensional and accurate analysis environment for financial data, such as company credit and financial information, to identify risks in advance and responding proactively,” Lee said.
During its digitization drive, FSS will review operations with digital infrastructure, including introducing wireless network environments and tablets for business use, while gradually phasing pdf format for “machine transmission format in sanction information.
Exploits Artificial intelligence (AI) For automation and survival verification purposes are also discussed.
While complete digitization of their services comes with many risks and challenges, FSS says it remains decisive when it comes to achieving innovation in South Korea’s financial landscape.
FSS has long worked with initiatives that would support the country’s rapidly developing financial ecosystems in South Korea. 2023 put that ball rolling with a Digital currency system for investors’ protection and market efficiency.
As the use of digital currency reaches a glowing pitch, FSS has increased its surveillance over the industry and improved existing systems for Non-fungible tokens (Nft) and Stablecoins. Across the line, South Korea is able to completely digitize its economy with CBDCs and AI integrations.
Look: Find ways to use CBDC outside digital currencies
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