The Bank of Korea wrapped up the first phase of a central bank digital currency (CBDC) simulation project in December 2021, according to a report published on Monday.
- The first phase tested the basic functions of a CBDC including manufacturing, issuing and distribution in a simulation environment, the report said. It concluded that the CBDC “works normally” under test conditions.
- Based on the results of the first phase, the report said the South Korean central bank plans to explore implementing other functions such as offline payments and adding personal information protection enhancement technologies.
- In a separate statement, the bank said more experiments are needed to confirm if the CBDC would work as effectively in a real environment.
- After the second phase is completed this June, the bank plans to conduct a comprehensive evaluation of the project and continue usability experiments in cooperation with financial institutions.
- Central banks around the world are increasingly exploring CBDCs. China has been running trials for its digital currency eCNY over the past year while Nigeria’s central bank launched the eNaira in October 2021.
- Bank of Korea has been working on setting up a CBDC pilot project since at least 2020.
- In July 2021, Bank of Korea chose Ground X, a blockchain subsidiary of South Korean tech giant Kakao to build the CBDC pilot platform.