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Bank of Korea seeks tech partner to build central bank digital currency

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Bank of South Korea will launch Phase I of Digital Won Testing (CBDC) in August this year. The performance check of the national digital currency (CBDC) will be carried out until December 2021.

In February, the Bank of Korea published a book on CBDC. Where announced plans to test the spread of the digital won. As well as outlined the legal issues surrounding the government’s digital currency.

In March, South Korea’s oldest bank, Shinhan Bank, partnered with the LG Corporation’s IT department to unveil a pilot blockchain platform for CBDC.

The South Korean central bank is now seeking a technology partner through an open bidding process to explore the practical aspects of launching a digital currency. The testing will create a platform that will simulate commercial banks and retail outlets. Also it will include mobile payments, transferring funds and making deposits.

The structure of the global financial system is changing rapidly, representatives of the Korean banking regulator said at a press conference. “The steps we are taking now are preparing for changes in the rapidly changing system of settlements for payments”, the regulator explained. If the first phase of the digital won test successfully completed, it will be launched in early 2022.

A number of countries have already launched digital currency trials

According to a recent Bison Trails report, about 80% of central banks are exploring use cases for government cryptocurrencies. And 40% are already testing proofs of concept. In March, researchers at the Bank for International Settlements (BIS) said that compliant government cryptocurrencies would open up opportunities for countries to improve cross-border payments.

At the moment, a number of countries in Europe and Asia have already announced their intention to launch tests of the digital currency. In April, the Bank of Japan began testing the digital yen. A total of three stages of testing the digital yen are planned. The first stage will test the effectiveness of using the coin as a means of payment. The second phase aimed at a more detailed study of CBDC. So, during the third phase, private enterprises and ordinary users will have access to digital currency.

China is the closest to issuing its own national digital currency. One of the largest retailers, JD.com, started using the People’s Bank of China’s electronic payment system (DCEP) to pay some employees’ salaries, previously it started paying for purchases this way. The digital yuan is being tested in China from October 2020.

In the fall of 2020, discussions began on the concept of the digital ruble. In April, the Bank of Russia announced that its testing would begin in the first quarter of 2022. The regulator announced the need to create a prototype of the digital ruble platform by the end of the year.

Korea intends to catch up with China

China’s strong desire to be the first to introduce CBDC has forced South Korea to join the race. The Korean business publication Korea Times writes. Initially, the Bank of Korea (BOK) wasn’t very serious about the CBDC implementation project. But China’s activity forced the Korean financial authorities to accelerate research in this area. Interest in CBDC also revived by the coronavirus outbreak, as the spread of COVID-19 has led to an increase in contactless payments. Today South Korea intends to catch up with China and be among the first to launch its own digital currency.

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