South Korea set to launch digital currency

From the fourth quarter of next year, South Koreans will be able to use the central bank digital currency with public vouchers.

The Bank of Korea, Financial Services Commission and Financial Supervisory Service jointly announced the details on the pilot project on Thursday, following a previous notice in October.

Thursday’s announcement was made on the sidelines of a visit by Agustin Carstens, general manager of the Bank for International Settlements, which the BOK cooperated with for the introduction of the digital currency system.

Central bank digital currencies are a new form of digital money issued by a central bank, divided into two types: the wholesale CBDC for institutions and the retail CBDC for individuals.

For the real-world testing of CBDC, up to 100,000 individuals will be able to test it out using public vouchers in the fourth quarter of next year.

While state and local governments currently issue public vouchers for subsidies, under the new system banks will issue tokenized deposits, which can serve as digital vouchers. Individual users can use the tokens to purchase goods and services.

Authorities gave examples of using the CBDC vouchers to pay for child care or education as possibilities, though it did not confirm which public vouchers will be included in the pilot test.