South Korea is preparing to introduce a CBDC pilot program that will engage 100,000 citizens starting next year.

In an innovative stride, South Korea is on the verge of launching a pilot program slated for 100,000 citizens, facilitating the use of deposit tokens issued by the central bank. digital currency (CBDC) .

This endeavor is a partnership collaboration involving various stakeholders. Bank of Korea (BOK) , the Financial Services Commission (FSC) , and the Financial Supervisory Service (FSS) A CBDC, or Central Bank Digital Currency, signifies an emerging form of digital currency directly issued by a nation's central banking authority.

The announcement comes in the wake of Agustin Carstens' visit to the Bank of Korea, as part of the central bank’s ongoing exploration of the tangible uses of CBDC, a focus initially revealed in October.

CBDCs for Designated Payments Only

Throughout this pilot program, selected commercial banks will recruit participants from September to October next year, operating over a span of three months. This initiative allows users to make purchases with deposit tokens, functioning similarly to store vouchers.

The introduction of digital currencies is aimed at tackling numerous challenges posed by current voucher systems, such as exorbitant transaction fees, delays in settlements, issues with post-transaction verifications, and worries regarding fraudulent activities. CBDC However, the participants' use of the currency during the pilot will be restricted to its intended payment purposes. Personal transfers and other forms of use will not be allowed at this stage.

Additionally, the pilot will encompass technological evaluations aimed at assessing the viability and efficiency of these newly introduced financial tools.

In addition to enabling digital payments Integrating CBDC within Carbon Emissions Trading.

One significant experiment partners the Bank of Korea with the Korea Exchange to incorporate the CBDC into a simulation environment for carbon emissions trading, examining the practicality of 'delivery versus payment' transactions involving carbon credits and payment tokens.

The Bank of Korea plans to kick off the pilot project in the final quarter of 2024, following discussions with relevant stakeholders and a review of applicable legislation. Success in this pilot could lead to advancements in digital currencies and their real-world applications.

During his visit, Agustin Carstens hailed the project as a 'digital Won' and applauded the Bank of Korea's proactive mindset in shaping future monetary systems. This pilot serves as a testament to South Korea's dedication to exploring innovative avenues in the realm of digital finance, potentially redefining financial transactions.

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