The Bank of Korea has successfully completed the first phase of its mock central bank digital currency (CBDC) tests. started in August 2021.
South Korea’s central bank said The first phase of its CBDC mock test was completed in December, while the second phase is currently underway, YNA news reported. The first phase of the mock test included some of the basic functions of the sovereign digital currency, such as distribution and issuance.
The second phase of the central bank’s digital currency pilot will test real-world functionalities such as cross-border remittances, retail payments and offline payments.. The bank stated:
“We will confirm the possibility of operating various functions, such as offline settlements, and the application of new technologies, such as the one aimed at strengthening privacy protection during the second phase of the test.”
The Bank of Korea (BOK) also intends to incorporate financial institutions for the second phase, much like what China is doing with its digital yuan. However, unlike China, the digital currency issued by the BOK would also focus on user privacy.
The second phase is expected to end in June 2022, after which the central bank plans to establish an official launch and marketing plans.
South Korea has thus joined the select group of nations that have started or completed the pilot phase of their CBDC trials. According to data from the Atlantic Council, currently 91 nations are working on their sovereign digital currency and only 14 have reached the pilot phase.
South Korea has become one of the leading countries in the cryptocurrency arena in recent years and has recently revealed its plans to become a world leader in the metaverse as well. Although China is currently ahead of the CBDC game, many European and Asian counterparts have accelerated their development plans to catch up..
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