South Korea Starts With New Digital Currency Experiment: Report

South Korea starts with a new digital currency experiment as a pilot program for its central bank digital currency but the issuance is still under question as we read more in our latest crypto news today.

The bank of Korea is looking for a tech partner for the new digital currency development program and the trial will be carried out in two stages with the first one scheduled for this summer. South Korea starts the new experiment in a crucial time for crypto and the bank even opened the bids to fill the role of technology suppliers for the upcoming CBDC trial as the local news outlet Korea Herald reported. The trial was allocated with a total of $4.4 million and will be conducted in a “virtual environment” in two stages with the first one being slated to run from August until December 2021.

However, the bank officials noted that the Bank of Korea has no plans of issuing a digital currency but the pilot program will only look into the feasibility of the overall effectiveness:

“We are launching the pilot test to see how [a] CBDC could be used as a form of the safe asset when the share of cash transactions decline significantly,”  adding that “the necessity to issue its digital currency is not urgent at the moment.”

CBDCs refers to centralized versions of fiat currencies like the US dollar or the EUR that aim to bring speed and security to monetary systems across the world. The first stage of the trial will focus on CBDCs basic functionalities and will include testing the issuance and circulation. The second stage is scheduled to conclude in June 2022 and will explore more detailed aspects of the central bank’s digital currencies like cross-border transactions and offline payments. The Bank will also study the effects of digital currencies in protecting user privacy.

A few other giants like Kakao and Naver as well as LG expressed their interest In the central bank’s upcoming trial. Samsung is also expected to decide on a bid for the pilot program. For the past few years, central banks and governments were researching for CBDC feasibility and many of them are still being cautious about the new forms of digital money while other countries made major advancements in the field.