Seoul, South Korea - The Bank of Korea (BOK), the Financial Services Commission (FSC), and the Financial Supervisory Service (FSS) have detailed the framework for the "CBDC Pilot Project".
The main points are as follows:
A. CBDC Pilot Project Overview:
- Announced on Wednesday, October 4.
- Cooperation among BOK, FSC, and FSS.
- It is aimed at developing a future monetary system for Korea.
B. Cooperation with the BIS:
The Bank for International Settlements (BIS) provided technical advice in the initial phase.
C. Objective:
- To evaluate a monetary system based on wholesale CBDCs.
- Commercial banks will use wholesale CBDCs for interbank transfers and settlements, similar to the use of reserves at the BOK.
D. Technology:
- BOK to establish a "CBDC network" using distributed ledger technology (DLT).
- Oversight by BOK, FSC, and FSS.
- Payment instruments such as tokenized deposits will circulate through commercial banks within this network.
E. Technical advancements:
- Incorporates advanced technology into the monetary system framework.
- Possible introduction of new payment and financial services.
- This could lead to the handling of new financial products such as "token securities."
F. Testing:
- Both virtual and real-world testing will be conducted on a controlled scale.
- The general public will experience these digital payment tools in selected cases.
G. Legal considerations:
- The project will initially involve commercial banks for legal reasons.
- Further decisions will be based on accessibility and compliance with applicable laws.
- Public testing will comply with existing security regulations.
H. BIS involvement:
- The BIS has been involved in research on future monetary systems such as CBDCs.
- The BIS provided technical expertise during the design phase of the CBDC network.
- A joint BOK-BIS report details the project's objectives and the CBDC network's features.
I. Future steps:
- The collaboration will involve the Ministry of Economy and Finance (MOEF).
- The selection process for the IT system integrator is underway, with details on Korea's e-procurement system (www.g2b.go.kr).
- Information sessions are scheduled for October, and further details, including the list of banks, will be announced in November.
- Public testing is expected to begin in the fourth quarter of next year.
The CBDC pilot project is an exploratory effort to determine an appropriate CBDC design for Korea's economic landscape.
The design of the current CBDC network is preliminary, and no official CBDC has been established.
