100,000 South Korean citizens to begin using digital Won CBDC in 2024 pilot

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South Korea is set to initiate a digital currency pilot program involving 100,000 citizens. This program, which is a collaborative effort between the Bank of Korea (BOK) and financial regulatory bodies, was announced following a meeting with Agustin Carstens, the general manager of the Bank for International Settlements. The pilot will allow selected participants to spend deposit tokens based upon a central bank digital currency (CBDC), which will be issued by commercial banks.

The BOK sees this digital currency as a solution to issues like high transaction fees and slow settlement processes, particularly noting its potential benefits during situations such as the COVID-19 pandemic and in distributing childcare grants.

Usage of this digital currency will be restricted to payments only, with personal remittances and other uses not permitted at this stage. Additionally, the BOK plans to conduct technical experiments, including integrating CBDC with a carbon emissions trading simulation system in collaboration with the Korea Exchange.

The full pilot project is set to commence in the fourth quarter of 2024, following consultations and legal reviews. The BOK is open to considering separate pilots based on proposals from banks. Carstens, who met with BOK Governor Rhee Chang-yong, praised the project, referring to it as the “digital Won” and commending the central bank’s forward-thinking approach to the future of currency.

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