Bank of Korea to test CBDC in 2021

07 Oct 2020

The Bank of Korea is planning to run trials of a central bank digital currency (CBDC) in 2021.

The move follows two years of research into the technical phase over summer, according to The Korea Herald, and will see distribution and circulation testing being carried out.

According to the central bank, the test is aimed at ensuring whether the CBDC would be able to replace cash or current forms of transaction measures.

The Bank of Korea’s digital currency research team is planning to open a server and conduct the experiment, reports The Korea Times.

An official from the central bank stated: “We will create a virtual environment by using blockchain technology and test whether our CBDC can be used for real-world transactions. The CBDC will be issued and circulated in the virtual world and we are going to test a number of transaction scenarios under a variety of circumstances.

"For now, the BOK does not have any plans to partner with any private companies over the test, and this will be carried out on our own."

As it stands, the Bank of Korea is in the analysis phase of the project, the second of three steps. 

Virtual issuance and circulation of the CBDC is within the final phase scheduled for the beginning of 2021.

CBDC has been mainly tested in developing countries, aiming to enhance financial inclusion. However, it has also recently been adopted by countries such as China and Sweden as they ramp up preparations for a cashless society.

In January 2020, the central banks of countries including Sweden, Canada, Britain, Japan, the European Union (EU) and Switzerland joined together to form the CBDC Research Group.

In June this year, the Bank of Korea formed a legal committee to advise on the potential launch of the digital currently, reports Coindesk.