The Bank of Korea (BOK) will launch a pilot project allowing 100,000 people to use digital tokens instead of bank deposits to make payments at stores from December.
The Bank of Korea (BOK) is moving closer to a large-scale trial of its central bank digital currency (CBDC). Starting in December, the BOK will allow 100,000 selected users to use digital tokens, converted from bank deposits, to make payments at supermarkets and convenience stores nationwide, according to the Korea Times on September 20. The initiative is part of a CBDC pilot project, conducted in partnership with six of South Korea’s largest commercial banks.
In this project, the BOK will issue wholesale CBDC to participating banks. The banks will then convert the CBDC into deposit tokens, which function similarly to electronic vouchers, for consumers to use at designated retail locations. Users can use the tokens to pay for goods and services, similar to how they would use cash or a debit card. The goal of the trial is to evaluate the efficiency and feasibility of using CBDC in retail payments, considering whether it can improve or replace the current payment system based on bank deposits.
The pilot project builds on the digital economy promotion plan announced by the BOK last October. To ensure a smooth implementation, participating banks are actively establishing partnerships with retailers and developing the necessary digital platforms. For example, NH Nonghyup Bank is partnering with convenience store chain Hanaro Mart, while other banks are in talks with major supermarket chains and convenience stores to expand their token acceptance networks.
In addition to the domestic pilot project, BOK is also participating in the Agora project, a global initiative to explore cross-border payment encryption. The project involves six major South Korean banks, demonstrating the country’s commitment to exploring the potential of blockchain technology in the financial sector.
“Although the implementation schedule may be delayed from the initial plan, we are working hard to launch a CBDC trial with 100,000 participants using deposit tokens by the end of this year. This will be a global milestone in the research and application of CBDC,” a banking official said.
