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BOK to test digital currency from August

Posted May. 25, 2021 08:43,   

Updated May. 25, 2021 08:43


The Bank of Korea (BOK) will begin experimenting with a central bank digital currency (CBDC), a digital currency to be issued by the central bank from August. The BOK said the experiment does not presume the issuance of a CBDC.

“We will launch CBDC simulations in August and complete the first stage of experiments for the basic functions of a CBDC by December,” said the central bank on Monday. The BOK will create a CBDC experiment environment on a public cloud to enable users to exchange their deposits for the CBDC or use the CBDC to buy products and services to verify the utility and technical feasibility of the CBDC. A CBDC, a currency electronically issued by a central bank, does not have credit risks, unlike cryptocurrency.

The bank will begin the second-stage experiments next year to test CBDC transfers between countries and offline CBDC transfers and payments in an environment with no access to the Internet. The BOK allocated up to 4.96 billion won of budget to the research on a CBDC.

The BOK said there is no huge need to issue a CBDC at the moment. “The research is in the case for changes in the future payment environment,” said a member of the BOK. “When the use of cash diminishes significantly, a CBDC can emerge as a safe asset and a means of payment.”

Hee-Chang Park ramblas@donga.com