Bank of Korea Set to Experiment with Wholesale CBDC, a New Development in Digital Currency

Crypto News– The Bank of Korea (BoK) has unveiled plans to embark on a wholesale central bank digital currency (CBDC) trial, in collaboration with the Bank for International Settlements (BIS) and other key institutions.

Bank of Korea Set to Experiment with Wholesale CBDC, a New Development in Digital Currency

South Korea’s central bank made the announcement on Wednesday, outlining the primary objective of the experiment: to assess the viability of a prospective monetary system underpinned by wholesale CBDCs.

The pilot project will delve into the potential utility of a wholesale CBDC as a settlement asset for tokenized deposits within commercial banks. Furthermore, the initiative will explore the programmability aspects of tokenized deposits. The collaborative effort will see BIS researchers partnering with the Bank of Korea, with oversight from South Korean financial regulatory bodies, including the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS).

FSS First Deputy Governor Lee Myung-soon stated, ‘The BoK has persistently pursued technological research related to CBDCs. This test, building upon past achievements, represents a significant step towards creating a prototype for the future monetary system.’

While the Bank of Korea had previously conducted trials involving retail CBDCs, it concluded that a retail CBDC was presently unnecessary, given the efficiency of South Korea’s existing payment infrastructure. Bank of Korea Deputy Governor Bae Joon-Suk remarked in a BIS paper, ‘While there is no immediate need to issue [a] CBDC in Korea, we believe that there is a strong case for us to be prepared for the potential introduction of [a] CBDC in the future.’

BIS’s Integrated Ledger Solution

The Bank of Korea’s (BoK) wholesale CBDC pilot coincides with the ongoing development of the Bank for International Settlements (BIS) unified ledger framework. In June, BIS introduced a comprehensive vision for this framework, aiming to seamlessly integrate central bank digital currencies (CBDCs), digital currencies issued by commercial banks, and tokenized assets within a unified and programmable network.