The Bank of Korea (BOK), South Korea’s central bank, has begun testing its digital KRW prototype.
The bank has chosen to conduct a two-stage central bank digital currency (CBDC) pilot, the first of which will run from this week through June of next year, with the goal of determining the viability and usability of the technology. The BOK will subsequently conduct a second series of tests to address privacy concerns and investigate additional use cases, like as cross-border transfers.
As previously reported, the BOK chose a partnership led by a number of Kakao subsidiary companies to carry out the trial. Kakao is a rapidly expanding tech behemoth with a popular chat app, its own e-payment network, and a variety of crypto and blockchain-related activities.
Two Samsung enterprises are also working on the project, corroborating prior claims of the conglomerate’s involvement — Samsung Electronics divisions or subsidiaries and Samsung SDS, which provides IT services.
A number of smaller domestic blockchain and IT businesses, as well as the US-based Ethereum (ETH)-focused company ConsenSys, are also on board.
Despite the fact that local stablecoin projects and cashless pay incentives are becoming nearly widespread in the East Asian nation, the BOK, which has yet to commit to issuance, is still avoiding the sticky subject of rollout deadlines.
CBDC drivers are now “beginning globally,” according to a BOK official, and Sweden is “at the forefront” of progress.
The e-krona initiative in Sweden is well advanced, but Seoul is likely focusing on a much closer country: China. Beijing’s digital yuan trials are nearly complete, and the country is on track to deploy its token in time for the 2022 Winter Olympic Games, either statewide or in the capital.
South Korea, like its East Asian neighbor Japan, is not used to ceding the lead in any element of technological innovation to China. As a result, both the BOK and Japan’s central bank have accelerated the pace of their CBDC programs in recent months, while avoiding direct mention of the digital yuan and instead emphasizing the need to stay up with “global” changes.
Should issuance be verified, BOK governor Lee Ju-yeol stated last month that it would take “two or three years at the earliest” to issue a token.
However, he clarified that the decision to create a CBDC prototype was made in response to a reduction in cash demand, not as a “response to” the difficulty of cryptoasset adoption.