Bank of Korea to Execute Digital Currency Trial Next Month

Synopsis

The Bank of Korea will commence a trial for using digital tokens linked to bank deposits for payments at various retail outlets beginning April 1. This initiative is part of a broader effort to launch a wholesale central bank digital currency (CBDC). Up to 100,000 participants will be involved in this pilot program.

Key Takeaways

Test of digital tokens for payments starting April 1
Up to 100,000 participants will be allowed
Digital tokens can be converted from bank deposits
Maximum token value set at 5 million won
Project Hangang will last until the end of June

Seoul, March 24 (NationPress) The central bank of South Korea announced on Monday that it will initiate a test involving the use of digital tokens derived from bank deposits for payments at various online and offline stores, as part of its extensive evaluation to implement a wholesale central bank digital currency (CBDC).

Since 2021, the Bank of Korea (BOK) has been engaged in a mock trial of a CBDC, which represents a digital version of a nation's currency that is both issued and regulated by its central bank.

In contrast to cryptocurrencies, CBDCs are intended to serve as a digital counterpart to a nation's traditional fiat currency, maintaining a fixed value, as reported by the Yonhap news agency.

Commencing on April 1, the new initiative will allow up to 100,000 participants to utilize their deposit tokens for purchases at a variety of online and offline retailers, such as 7-Eleven convenience stores, Kyobo Bookstore outlets, Ediya Coffee shops, and the Hyundai Home Shopping website.

Participants will have the ability to convert their bank deposits into digital tokens and make payments using QR codes through the applications of seven major banks, including KB Kookmin, Shinhan, and Hana. The BOK stated that the maximum value of digital tokens available for use during the testing phase will be capped at 5 million won (approximately US$3,411.57).

The pilot program, termed Project Hangang, is set to run until the end of June and is being executed in partnership with the Financial Services Commission (FSC), the Financial Supervisory Service (FSS), and other relevant entities.

A BOK official commented, "The token-based payment system is anticipated to lower commission fees for affiliated stores while enhancing user convenience," according to reports.

"Following this usability assessment, the Bank of Korea will aim to conduct further tests and initiatives focusing on individual transfers and digital vouchers," the official added.