The authorities in South Korea are making significant developments regarding the country’s digital currency sector while fulfilling the commitment to dealing with the central bank digital currency (CBDC) sphere. Recent reports have pointed out that the country has selected 3 likely regions where the CBDC pilot project will pioneer. Nonetheless, the authorities have bypassed Seoul (the capital of the country) in this respect.
South Korea Shortlists Three Regions for Its CBDC Pilot, Bypassing Its Capital
In addition to this, South Korea’s central banking agency named The Bank of Korea is charting an exclusive region by formulating a strategy to release as well as disseminate the national currency’s digital version. This development could change the dynamics of the financial sector of the country while making advancements in the worldwide race concerning digitizing national currencies.
Particularly, the Bank of Korea has selected Incheon, Busan, and Jeju as the likely regions where the testing of the CBDC project can be carried out by the country’s officials, as noted in the reports provided by a native media outlet in South Korea. The banking agency disclosed this development on the 31st of July while excluding Seoul’s busy metropolis from the list.
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As a consequence of this selection, the respective 3 regions can become the grounds for the pilot of the country’s digital currency. Nonetheless, the same report also disclosed that the Bank of Korea will ultimately choose one area to carry out the pilot project. Following that, the selected area will carry out experimentation with public-level distribution and payments with the help of the CBDC.
Apart from that, it will also procure franchises capable of processing payments with digital currency. The bank has also issued an official statement in this regard. According to the bank, the agency will establish an e-wallet application for its CBDC. The respective app will permit not just the people living within the region but also several civilians, taking into account tourists, to utilize the e-wallets.
The Bank of Korea’s regional CBDC trials will follow comply with a model analogous to the present native currency scheme that is implemented in several regions within South Korea. This plan was introduced as a remedy for financial aid as well as fundamental earnings during the COVID-19 pandemic. It is presently utilized in Jeju, Incheon, and Busan.
The respective areas release as well as distribute their regional currencies, taking into account ‘Incheon e-Eum,’ ‘Dongbaekjeon,’ and ‘Tamranjeon.’ As per a Korean commercial bank officer, the selection for the CBDC pilot project was significantly prone toward Jeju. The reason behind this is that the cumulative figure of eligible residents in Busan is reportedly troubling the Bank of Korea.
According to the official, the cumulative targeted citizens in Busan are numerous hence the authorities will move toward Jeju. At the moment, the agency has temporarily postponed the decision of choosing the final candidate among the 3 short-listed regions. This decision has been taken while considering some internal problems related to the Korean banks.
Successful CBDC Implementation in South Korea May Inspire More Countries
If the pilot tests of the South Korean CBDC are carried out effectively, they could likely reshape the country’s financial landscape. In this way, the country can provide equal opportunity to tourists and citizens to experience the exclusive transformation to digital finance. Although CBDCs present additional technical barriers as compared with the local currency project, the effective implementation of the current pilot could inspire more countries toward this route.