The Bank of Korea shortlisted three regions for potential CBDC testing next year, and the country’s capital Seoul was not on the list.
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South Korea selects 3 regions for CBDC pilot, excludes Seoul. Jeju, Busan, And Incheon Make The Cut
A local South Korean media outlet shared updates on July 31, 2023, regarding preparations for the launch of the central bank digital currency (CBDC) in South Korea. The government has been working on the South Korean digital won since 2020 and has scheduled its pilot for the next year. The Bank of Korea has selected Jeju, Busan, and Incheon as candidates for the "private target CBDC test bed" in collaboration with commercial banks. One of these three regions will eventually be chosen to test the public distribution process and the use of CBDC as a means of payment. Jeju has the highest chances of becoming the CBDC pilot site, as explained by one of the bank officials. South Korea selects 3 regions for CBDC pilot, excludes Seoul.
"In the case of Busan, the number of eligible citizens is so large that the Bank of Korea is burdened in many ways, so the opinion was greatly inclined to Jeju, which has the next largest population."
The Bank of Korea has announced that the pilot testing for CBDC will follow a structure similar to the issuance and distribution of local currencies. In response to the COVID-19 pandemic, South Korea introduced local currencies as an alternative means of payment to support local economies. The three suggested regions for the CBDC pilot, namely Tamranjeon, Dongbaekjeon, and Incheon e-Eum, are currently issuing and distributing their own local currencies. This might explain why the Bank of Korea chose these regions instead of Seoul.
A commercial bank official said, "The CBDC electronic wallet (app) will allow not only local residents but also many unspecified civilians such as tourists to open. We are in contact with distribution companies such as large supermarkets."
Obstacles For The South Korean CBDC Launch
The report also revealed that unlike existing local currencies, the CBDC system has a lot of technical barriers to overcome. The Bank of Korea tested the payment performance of the CBDC system for about six months last year, and it was found to be inferior to major domestic micropayment operators in terms of processing speed.
An official from the IT industry said, "As the Bank of Korea is planning a large-scale retail payment system project soon, it is in need of an exceptionally large number of IT personnel. A large number of related personnel, including large companies, are on the move,” he explained.
The digital market in South Korea is currently facing a significant challenge with a rise in criminal activities. To address this issue, the government recently launched a multi-agency investigation unit to combat the problem.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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