South Korea Completes Its Central Bank Digital Currency’s 1st Phase Testing, Entering Phase 2

The central bank of the East Asian country, Bank of Korea (BoK), was reportedly successful in concluding its first stage of two-part mock testing of its CBDC (Central Bank Digital Currency), which was carried out in December. The whole CBDC testing program should be ready and done by June this year, they announced.

This testing comes on account of the rapid growth in the demand and usage of cryptos in the private sector, with the Korean government curating its own digital currency to match the industry’s pace.

The release disclosed that the de facto central bank of South Korea tested several basic functionalities of a CBDC including manufacturing, issuing, and distribution in a “simulation environment in the cloud.” While the first stage of this program was already done by December last year, reports of the update came out today, originating from the local news outlet The Korea Herald.

Clearing The Steps To Launching its CBDC – Korea

BoK had first declared its plans of commencing a pilot program in August 2021, to examine the feasibility of a retail CBDC. The project kick-off with aspirations of moving closer towards a cashless economy, and will bring vast changes into the economy’s business sector; it shared its goals by jointly working with tech giant Kakao Corp’s blockchain arm Ground X. 

Now, with the first phase complete and the second stage of this process ongoing, they’re all set to review the technology needed for its actual usage. In this phase, wiring and payment in an offline environment, cross-border wiring, and trading of digital assets will be tested based on the technology acquired through the first phase.

The bank fully intends to discuss the actual launch and commercialization of the CBDC with the Korean authorities soon after finalizing the project by June this year. 

CBDC Initiatives In Other Countries: US, China, And Many More

China has been actively promoting its own digital currency project as well, compelling people in multiple provinces to use a trial version of the digital yuan. The Chinese government is quite close to launching its CBDC, despite rising concerns over it getting abused to bolster government surveillance of money transactions.

Meanwhile, Nigeria, the Bahamas and the Eastern Caribbean nations have already rolled out their own digital currencies for use.

In the US, the Fed released a report examining the pros and cons of a central bank-owned digital currency quite recently, perhaps in a bid to gauge the people’s and officials’ stances on the move (to check out more about this report, click here).

Bank of Korea On Concerns and Delays Regarding CBDCs

The Korea Herald reports that the BOK also casted doubts on all major economies who’re adopting their digital currencies and said it would take “a long time” for them to fully launch them. “Central banks in major economies have been taking the stance that the digital currencies will replace cash rather than savings in banks,” the BOK said in the report.

“We are testing a slew of measures that could minimize the negative impacts of the digital currency on financial stability.”

Sneh Dokania is an Economics major student with an inquisitive disposition seeking to articulate facts, information and news stories in a candid manner on Clout News.

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