Bank of Korea Announces Pilot to Issue Wholesale Central Bank Digital Currency

The central bank digital currency (CBDC) pilot program will launch, according to the Bank of Korea (BoK). The Financial Services Commission, top commercial banks, and the BoK will work together to issue the CBDC.

Utilizing blockchain technology, the CBDC will be utilized as an alternate settlement method. In order to improve efficiency and lower costs for market participants, it will also provide a second route for non-cash payments.

Up to December 2020, the test program will last around six months. Through a consortium blockchain network made up of significant commercial banks and other financial institutions, the BoK will issue digital dollars (D-dollar). Based on its current payment system, the BoK will issue D-dollars, which it will then distribute to partner financial institutions for use inside their networks.

In comparison to current paper-based payment systems, the CBDC is anticipated to increase security, reduce transaction costs, and increase transparency in payment systems. Once the system is completely deployed throughout the country, it is anticipated that the present two-day settlement time for domestic transactions would be reduced to one day or less.