Bank of Korea Announces Retail CBDC Pilot Program for 100,000 Citizens

According to Yahoo News, the Bank of Korea (BOK) has released details on its retail central bank digital currency (CBDC) pilot program, which will involve 100,000 selected Korean citizens participating in the trial during the fourth quarter of next year. Participants will be able to purchase goods using CBDC tokens issued by commercial banks, with the central bank stating that a digital currency could address issues with existing voucher systems, such as high transaction fees, complex and slow processes, limited post-transaction verifications, and concerns over fraudulent claims. The announcement came after Augustin Carstens, the general manager of the Bank of International Settlements, visited Seoul. Last month, South Korea's central bank outlined its wholesale CBDC pilot plan to support tokenized deposits in commercial banks and explore new forms of financial products. The distinction between wholesale and retail CBDCs is crucial, as financial institutions and interbank settlements primarily use wholesale CBDCs, while individuals and businesses use retail CBDCs for daily transactions. South Korea's central bank is currently discussing the selection of a city from three potential candidates — Jeju, Busan, and Incheon — as a test bed for piloting the CBDC. The bank has been working on CBDC pilots since 2020 and completed two phases of pilot tests in 2021 and 2022 for its retail CBDC. It also ran simulations from July to November 2022, in collaboration with Korea Financial Telecommunications & Clearings Institute (KFTC) and 14 commercial banks, as well as technology partners such as Samsung Electronics, Ground X, ConsenSys, KPMG, Kakao Bank, and Kakao Pay.