According to the Reuters report, South Korea’s central bank on Monday said it would choose a technology supplier to build a pilot platform for a digital currency, moving a step closer to creating a central bank-backed digital currency. The Bank of Korea is seeking a partner through an open bidding process to research the practicalities of launching a central bank digital currency (CBDC) in a test environment – the first such exploratory step in Asia’s fourth-largest economy.
Bank of Korea moves ahead with its CBDC.
The Bank of Korea’s efforts come as the spread of bitcoin and other cryptocurrencies has opened up the possibility that competitors of traditional cash could change how the financial sector operates. Central banks across countries from China to Britain and Sweden are looking at developing digital currencies to modernize their financial systems, ward off increasing cryptocurrencies’ threat, and speed up domestic and international payments. According to a BIS survey, central banks representing one-fifth of the world’s population are likely to issue their own digital currencies in the next three years.
BOK official claim cash transactions are decreasing.
“The share of cash transactions are decreasing significantly,” a BOK official told a news conference. “The steps we are taking now are to prepare for the changes in the payment settlement system, changing rapidly.” The platform will contain commercial banks and retail outlets simulations, and the trials will include payment via mobile phones, fund transferring, and making deposits, the BOK said. The CBDC pilot program will run from August to December this year, which could be expanded into a second phase next year. Central banks across countries are actively working on their national digital currencies. As reported earlier, US Federal Reserve revealed to release a paper on CBDC and seek public comments.