South Korea joins countries exploring central bank digital currencies (CBDC). Bank of Korea (BOK) will launch a pilot project investigating technical infrastructure for digital currency.

The joint CBDC pilot announcement by BOK, the Financial Services Commission (FSC) and the Financial Supervisory Services (FSS) was published on October 4. According to the documents, the project will evaluate the viability of a future monetary system based on "wholesale CBDCs."

The pilot will involve private banks and public institutions, and the Bank for International Settlements (BIS) will support it with technical expertise. BOK will test both retail and wholesale CBDC types. In the experimental framework of the latter, banks will tokenize their deposits and put them into circulation on the network monitored by BOK, FSC and FSS. Live testing of retail CBDC should begin immediately after the system is installed in Q4 2024.

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Regarding CBDC testing, BOK notes that discovery does not equal inevitable implementation. However, FSS First Vice President Lee Myung-soon described the pilot as a step into the future monetary system:

"BOK has continuously pursued technological research on CBDC. This test represents an important step towards creating a prototype for the future monetary system, building on past successes."

These words were echoed by a statement made on September 3 by one of the deputy governors of the Bank of France. Denis Beau, first vice president at Banque de France, called CBDC “a catalyst for improving cross-border payments by creating a new international monetary system.”