The Bank of Korea (BOK) is set to initiate public testing of a central bank digital currency (CBDC) in the fourth quarter of 2024. This announcement follows the BOK’s collaboration with the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) to formulate a comprehensive plan for the usability test. The testing phase will consist of two components: a real-world transaction test and a technical test conducted in a virtual environment.
The real-world transaction test will introduce digital vouchers to allow the public to experience the advantages of the CBDC. Banks will issue deposit tokens featuring digital voucher functionalities, enabling users to make payments when purchasing items. This approach aims to address the challenges associated with current support programs, such as high fees, complex settlement processes, and limited fraud detection.
CBDC-based deposit tokens with digital voucher functionalities are expected to streamline data collection and verification, facilitate real-time payments, and specify payment conditions, thus reducing reliance on private intermediaries. Drawing inspiration from the success of Singapore’s digital training vouchers, the BOK aims to enhance efficiency in subsidy distribution by leveraging CBDC technology.
The BOK, in collaboration with the FSC and the FSS, plans to finalize the selection of banks participating in the test during the third quarter of 2024. Public applications for test participation will be accepted in September and October 2024, with a maximum limit of 100,000 participants.
Additionally, the BOK will conduct a separate test in a virtual environment using technology experiments to explore the development of the future financial market infrastructure. Partnering with the Korea Exchange, the central bank intends to integrate the CBDC system with an external distributed ledger system to assess the simultaneous execution of payments for carbon credits and tokens issued for specific purposes.