Source: Adobe Stock / OlegKachura
The South Korean central bank, the Bank of Korea (BOK), has officially begun testing its prototype of digital KRW.
The bank has decided to carry out a two-stage central bank digital currency (CBDC) pilot, with the first stage running from this week until June next year, tasked with testing focus on tech feasibility and utility. The BOK will then follow this up with a second set of tests to address privacy-related issues and explore possible further usage cases, such as cross-border remittances.
As previously reported, the BOK chose to carry out the pilot with a consortium fronted by a number of Kakao subsidiary firms. Kakao is a fast-growing tech giant with a popular chat app, its own e-pay platform and a number of crypto and blockchain-related interests.
Per Fn News, two Samsung firms are also working on the project, confirming previous reports of the conglomerate’s involvement – divisions or subsidiaries of the mobile maker Samsung Electronics and the IT services arm Samsung SDS.
The United States-based Ethereum (ETH)-focused company ConsenSys is also aboard, as are a number of smaller domestic blockchain and IT players.
The CBDC pilot officially began yesterday, but the BOK, which is still yet to officially commit to issuance, is still distancing itself from the thorny issue of rollout dates – despite the fact that local stablecoin projects and cashless pay incentives are becoming almost ubiquitous in the East Asian nation.
A BOK official was quoted as stating that CBDC drivers were now “beginning globally,” and that Sweden was “at the forefront” of progress.
Sweden’s e-krona project is at a relatively advanced stage, but Seoul likely has its eyes on a much closer nation: China. Beijing’s digital yuan tests are almost complete, and the country is very likely to launch its token either nationwide or in the capital Beijing in time for the 2022 Winter Olympic Games.
South Korea is not used to losing the initiative to China in any aspect of tech innovation – nor is fellow East Asian country Japan. Both the BOK and Japan’s central bank have stepped up the speed of their CBDC projects to a breathtaking pace in recent months as a response – while avoiding direct mention of the digital yuan and instead talking up the need to keep up pace with “global” developments.
The BOK’s governor Lee Ju-yeol last month stated that it would take “two or three years at the earliest” to issue a token should issuance be confirmed.
However, he added that the decision to develop a CBDC prototype was a response to a drop in the demand for cash, rather than “a response to” the challenge of cryptoasset adoption.