The Bank of Korea has reportedly shortlisted three regions, excluding Seoul, for conducting a trial of its central bank digital currency (CBDC), as stated by a local South Korean media outlet.
The chosen locations are Jeju, Busan, and Incheon, which have been designated as potential “private target CBDC test beds.”
The bank’s long-term plan involves selecting one of these regions to experiment with payments and distribution on a public scale, aiming to secure franchises that can accept CBDC payments.
This move is expected to enable not only local residents but also tourists and civilians to participate in CBDC transactions through the CBDC electronic wallet app.
The Bank of Korea has mentioned that the regional closed tests for the CBDC will follow a similar pattern to the current local currency scheme that has been implemented in different parts of South Korea.
This local currency scheme was introduced during the COVID-19 pandemic to address basic income and relief payments.
Notably, the regions shortlisted for the pilot—Jeju, Busan, and Incheon—all currently issue and distribute their own local currencies such as “Tamranjeon,” “Dongbaekjeon,” and “Incheon e-Eum,” respectively.
An official from a commercial bank in Korea has revealed that Busan, due to its large population of eligible citizens, poses challenges for the Bank of Korea.
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Consequently, the selection appears to be leaning towards Jeju, which has the second-largest population.
Comparatively, the local currency scheme presents fewer “technical barriers” in contrast to CBDCs, as reported by the local media.
This observation highlights the importance of conducting trials in different regions to identify potential hurdles and find effective solutions for a nationwide rollout of the CBDC.
Furthermore, various banks in South Korea have expressed interest in stablecoins as potential alternatives to CBDCs, aiming to enhance operational efficiency.
In summary, the Bank of Korea’s decision to narrow down its CBDC pilot to Jeju, Busan, and Incheon reflects the strategic approach towards testing and refining the digital currency.
By conducting regional closed tests, the bank aims to gain valuable insights and establish a robust system for CBDC adoption in the future.
The initiative aligns with the growing interest in exploring alternative payment methods, emphasizing the country’s commitment to staying at the forefront of financial innovation.
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