The South Korean central bank, the Bank of Korea (BOK), is set to showcase a “blueprint” for its CBDC in September as the nation looks to speed up the progress of its digital KRW.
Per Fn News and the Byline Network, the BOK has “successfully completed” a CBDC interoperability-focused pilot, whereby it attempted to link its own prototype digital won platform with commercial banking and e-pay apps.
The BOK has been working on this key step of its CBDC development since May, and is now ready to “announce plans” for CBDC “infrastructure construction.”
The BOK will reportedly make an announcement in this regard in September, and is working closely with private sector partners.
The body has already begun requesting that the National Assembly pass relevant legislation.
The bank also appears to have held talks with the nation’s top financial regulators.
An official from the Financial Services Commission was quoted as stating:
“The relevant departments of the Financial Services Commission and the Financial Intelligence Unit are discussing the BOK’s CBDC project.”
The official said the regulators needed to “review” the BOK’s plans to ensure “there are no conflicts [of interest].”
And the regulator added that the “discussion on establishing a legal framework” for the digital KRW would “depend on what the Bank of Korea’s CBDC model looks like, and what laws and regulations can be applied to it.”
South Korean Central Bank Forges Ahead with CBDC Plans
The bank still needs to convince lawmakers to grant it the legal right to hold “digital assets.”
But there has been pushback to the BOK’s plans.
During the coronavirus pandemic, the government unveiled plans to create “contact-free” payment channels, with a CBDC touted as a tool that could help achieve this.
This has led to initiatives including “cashless buses” in Seoul.
The South Korean capital began piloting cash-free buses in October 2021, removing cash payment options on 171 buses.
This pilot has since been expanded, with other cities also debuting “cashless buses.”
But these plans have drawn a “public backlash” from certain sectors, media outlets reported earlier this year.
Lawmakers and politicians have also spoken about their desire to create a “cashless” society, but some critics have claimed that this would place too much power in the hands of the BOK.
Although the BOK initially claimed that it would not launch a CBDC due to the fact that so many e-pay solutions already exist in South Korea, events of the past few years appear to have caused it to make a U-turn.
The coronavirus pandemic drove initial discussions, but the rapid pace of China’s digital yuan pilot may have forced Seoul’s hand.
The Bank of Japan has also been pushing ahead with its own digital yen project.
Seoul is unaccustomed to losing tech races with Beijing, and – like Tokyo – directly funds private-sector IT R&D efforts.
With some 90+ nations already stating that they have looked into the possibility of launching a CBDC, the BOK wants to ensure it is not left behind – and is in the position to fast-track a digital won launch.