The Bank of Korea has successfully completed its first phase of testing a central bank digital currency (CBDC). The organization launched a pilot back in August 2021 and has been successful in carrying the mock currency. During this phase, the bank sought to put forward some of the basic functionalities associated with a CBDC and try to scale them up. At the beginning of the phase, the bank announced its partnership with Samsung, a domestic technological giant.
Distribution and issuance, as well as circulation, were monitored closely by the financial authority, local media outlet YNA reported. The second phase of the CBDC testing would involve cross-border remittance as well as offline and retail payments.
“We will confirm the possibility of operating various functions, such as offline settlements, and the application of new technologies, such as one intended to strengthen privacy protection during the second phase of the test,” the bank said in a statement.
The bank will also seek to involve other financial institutions in its second phase with the phase now running through June this year. Once the results of this testing phase are in, the bank will be able to designate an official launch date, becoming the second nation in Asia to create a robust CBDC solution. Indonesia has also been exploring the option.
China has made convincing strides in deploying its own version of CBDC, the e-yuan, which is now available at the Beijing Olympics next month. The US has been sceptical of China’s CBDC, calling it a security risk and not complying with any privacy laws. Opposition against CBDCs in the US has been heard at all levels of government.
China has rebutted those allegations. Meanwhile, there are 91 nations in the world that are currently working on cryptocurrencies. Some 14 are already in the pilot phase. Overall, there are over 100 central banking authorities exploring this option.
El Salvador became the world’s first country to adopt Bitcoin as legal tender, doing away with the need to introduce a dedicated CBDC altogether.