A pilot program, led by the Bank of Korea (BOK) and financial authorities, will invite 100,000 Koreans to use deposit tokens based on the Central Bank digital currency (CBDC) pilot next year.
The plans build upon a previous announcement made in October, where the central bank expressed its intention to conduct real-world experiments with CBDC.
In this pilot project, selected individuals (around 100,000) will be able to buy goods using deposit tokens issued by commercial banks in the form of CBDC, similar to using a voucher at a store. Participating banks will start recruiting individuals from September to October of the following year, and the project will run for three months.
The BOK, Financial Services Commission (FSC), and Financial Supervisory Service (FSS) revealed the plans following the visit of Agustin Carstens, the general manager of the Bank for International Settlements, to the BOK on Thursday.
The BOK highlighted that digital currencies could address challenges with existing voucher systems, such as those used for COVID-19 relief and childcare grants. Challenges include high transaction fees, slow settlement processes, post-transaction verification limitations, and concerns about fraudulent claims.
However, participants will only be allowed to use the currency for its designated purpose of payment. Other uses, like personal remittance, won’t be allowed initially. The pilot will also include technological experiments to assess the feasibility and effectiveness of issuing and distributing these new financial products.
