• The Bank of Korea has chosen Jeju, Busan and Incheon as its candidates for the CBDC pilot.
• The bank plans to select one region to experiment with payments and distribution at a public level.
• Multiple banks in South Korea are conducting research on stablecoins as CBDC alternatives.
South Korea to Pilot Central Bank Digital Currency
The Bank of Korea is pushing forward with its plans to pilot a central bank digital currency (CBDC), targeting three potential test regions for the issuance and distribution. Jeju, Busan and Incheon have been chosen as the candidates for the “private target CBDC test bed”, with the bank eventually selecting one of these regions and experimenting with payments and distribution at a public level.
CBDC Electronic Wallet App
An official from the Bank of Korea has stated that an electronic wallet app will be developed which will allow local residents, tourists and other civilians to use the CBDC. This will be similar to how local currencies are currently issued and distributed in various regions across South Korea.
Local Currency Scheme
The local currency scheme was introduced during Covid-19 pandemic as a form of basic income relief payment solution, such as “Tamranjeon” in Jeju, “Dongbaekjeon” in Busan and “Incheon e-Eum” in Incheon. An official from a commercial bank in South Korea has commented that due to the large number of eligible citizens in Busan this choice was significantly inclined towards Jeju which has the second largest population.
Multiple banks in South Korea have released information that they are conducting research on stablecoins as CBDC alternatives for efficiency purposes. Stablecoins have fewer technical barriers compared to CBDCs which could make them more suitable options for some applications.
South Korea is continuing its development of central banking digital currencies with three potential test regions identified including Jeju, Busan and Incheon for issuing and distributing their own digital currency . Banks within South Korea are also researching stablecoins as alternative solutions for efficiency purposes due to their fewer technical barriers compared to CBDCs.