Bank of Korea and Korea Exchange Embark on Groundbreaking DLT and CBDC Trials for Carbon Trading

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Bank of Korea and Korea Exchange are initiating a comprehensive exploration of Distributed Ledger Technology (DLT) and Central Bank Digital Currency (CBDC) within the carbon trading sector. This venture is set to unfold through a series of experimental trials, planned for the second half of 2024.

Both the central bank and the exchange are well into related projects. Korea Exchange is in the midst of DLT trials and is preparing to incorporate support for security tokens listed on their platform in the upcoming year. Simultaneously, the central bank is integrating these trials into its broader CBDC usability testing efforts.

Earlier in the month, the Bank of Korea disclosed its intentions to run wholesale CBDC trials, positioning the CBDC as a settlement asset for tokenized deposits. This announcement also made mention of the BIS Unified Ledger concept, suggesting a potential for including tokenized assets such as carbon credits within the same technological framework.

Korea Exchange Chairman Byung-du Son underscored the significance of keeping in step with global trends, asserting that the exchange is actively participating in the worldwide movement towards exploring DLT. He emphasised that this collaborative effort with the Bank of Korea marks a critical step in strengthening the financial market’s infrastructure. Further details on the plans are expected to be released in the upcoming month.

However, both institutions were clear in stating that this initiative is purely experimental and will not have any immediate effects on the current carbon credit markets. No final decision has been made regarding the adoption of DLT or the introduction of a CBDC.

Bank of Korea Governor Lee Chang-yong expressed his vision for the project, explaining that the CBDC usability trials are part of a larger strategy aimed at creating a durable digital infrastructure capable of supporting the economy’s transition to digital. He highlighted that this collaboration with Korea Exchange represents a significant milestone in this journey.

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