S. Korea's central bank moves to develop pilot digital currency

Cynthia Kim, Reuters

Posted at May 24 2021 06:26 PM | Updated as of May 24 2021 06:28 PM

SEOUL - South Korea's central bank on Monday said it will choose a technology supplier to build a pilot platform for a digital currency, moving a step closer to creating a central bank-backed digital currency.

The Bank of Korea said it is seeking a partner through an open bidding process to research the practicalities of launching a central bank digital currency (CBDC) in a test environment - the first such exploratory step in Asia's fourth largest economy.

The BOK's efforts come as the spread of bitcoin and other cryptocurrencies has opened up the possibility that competitors of traditional cash could change how the financial sector operates. 

Central banks from China to Britain and Sweden are looking at developing digital currencies to modernize their financial systems, ward off the threat from cryptocurrencies and speed up domestic and international payments.

Central banks representing one-fifth of the world’s population are likely to issue their own digital currencies in the next three years, a survey from the Bank for International Settlements showed. 

"The share of cash transactions are decreasing significantly," a BOK official told a news conference.

"The steps we are taking now are to prepare for the changes in the payment settlement system, changing rapidly."

The platform will contain simulations of commercial banks and retail outlets, and the trials will include payment via mobile phones, fund transferring and making deposits, the BOK said.

The pilot program will run from August to December this year, which could be expanded into a second phase next year.


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