South Korea’s CBDC Launch

South Korea’s central bank is reportedly set to launch a real transaction test for its central bank digital currency (CBDC) this month, involving 100,000 consumers and seven banks.

The trial, set to begin in March, will see consumers using deposit tokens issued by major banks including KB Kookmin, Shinhan, and Hana Bank. The pilot, carried out by the Bank of Korea, the Financial Services Commission, and the Financial Supervisory Service, will facilitate payments at popular merchants like 7-Eleven and through delivery app Ddaenggyeoyo.

Expected to run for about three months, this pilot may be delayed until April due to the need for cooperation among several institutions. Consumers can apply for deposit tokens with a limit of 1 million won (around $688) and conduct transactions using QR codes.

While South Korea has been preparing for this large-scale CBDC pilot for some time, the timeline has frequently shifted. Reports about the pilot first emerged in November 2023. The Financial Services Commission also mentioned plans for a digital voucher management platform to help distribute and track vouchers, though no specific timeline was provided.

The Bank of Korea highlighted that the nation is looking to replace cryptocurrency with controlled digital solutions, given the high levels of crypto trading participation among Koreans. Additionally, there is substantial interest and investment in blockchain technology from both major enterprises and start-ups.