Today the Korea Times reported that 100,000 individuals will participate in large scale pilots of tokenized deposits later this year, citing sources. However, it said the deposit tokens will be “akin to using vouchers”, consistent with previously announced plans. A year ago the Bank of Korea announced plans for a wholesale central bank digital currency (wCBDC) to support the interbank settlement of tokenized deposits from banks. It subsequently said there would be trials involving up to 100,000 people starting in September or October this year.
In June, two government institutions announced funding for a voucher project being developed by the central bank where the deposit tokens can be used for welfare, culture, education and other services.
However, today’s report states the vouchers in the pilot will be used to buy goods at convenience stores.
Last year the Bank of Korea said the voucher trials, which sound similar to Singapores’s Purpose Bound Money concept, would have two parts. All banks will participate in one trial. Another test will allow banks more leeway in the programmability. The central bank said the Korea Financial Telecommunications and Clearings Institute will be the smart contract management agency.
So far six major commercial banks are involved, but there’s no final decision on which institutions will take part. NH NongHyup Bank was mentioned as one of the participants.
“While the timeline seems slightly delayed compared to our initial expectations, we are working to launch the CBDC test involving 100,000 participants using deposit tokens by the end of the year, which would be a globally significant milestone,” a banking industry official told Korea Times.
Korea’s cross border CBDC work
Meanwhile, the Bank of Korea is also involved in Project Agorá, the BIS cross border payment initiative to tokenize correspondent banking that involves seven central banks and 41 institutions. That initiative also involves six Korean banks, Hana Bank, Industrial Bank of Korea, KB Kookmin Bank, NongHyup Bank, Shinhan Bank and Woori Bank. Additionally, Korea is an observer of mBridge, the other BIS cross border payment initiative.
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