The first phase of the Bank of Korea’s central bank digital currency mock testing, which began in August 2021, has been successfully completed.
According to YNA news, the South Korean central bank completed the first part of its CBDC simulated testing in December. And is now working on the second phase. The simulated test’s first phase focused on some of the sovereign digital currency’s most basic functions, including as distribution and issue.
The central bank digital currency (CBDC) pilot’s second phase would put real-world features. Including cross-border remittance, retail payments, and offline payments to the test. According to the bank:
“During the second phase of the test, we will validate the ability to operate various functions. Such as offline settlements. As well as the use of new technologies, such as one aimed at improving privacy protection.”
Similarly to what China is doing with its digital yuan, the Bank of Korea (BOK) is looking to onboard financial institutions for the second phase. In contrast to China, however, the BOK-issued digital money would prioritise user privacy.
By June 2022, the second phase should be completed. After which the central bank will develop a formal launch and commercialization strategy.
South Korea has now joined a restricted club of countries. That have either begun or completed their CBDC testing pilot phase. According to the Atlantic Council, 91 countries are actively working on their own digital currency. With only 14 having reached the pilot stage.
South Korea has lately stated its aspirations to become a world leader in the metaverse. Having become one of the major crypto-compliant nations in recent years. While China is now leading the CBDC game, numerous European and Asian competitors have hastened their development plans to keep up with it.