The global adoption of digital currencies appears to have become a priority for many countries. This development has spurred the Bank of Korea (BOK) to swing into action and create its own Central Bank Digital Currency (CBDC).
Korea’s apex bank has announced the pilot phase for its CBDC. According to a spokesperson, the BOK will begin conducting tests within a controlled environment.
The spokesperson stated that this would ensure the new digital currency’s workability and safety.
“The Bank of Korea is conducting an analysis of operational procedures for a CBDC rollout, and outside consulting is also underway. This year, we’re going to launch a CBDC pilot system in a virtual environment and run tests to verify its functions and safety.”
South Korea Joins the Race
The BOK has also released a book explaining the use of its CBDC, stated the announcement. The publication will cover relevant legal issues in the country that affect the issuance of the CBDC.
Bank officials have acknowledged the benefit of applying blockchain technology in the creation of a CBDC. A successful implementation will allow a seamless system of peer-to-peer transactions among individuals. It would also eliminate the need for unnecessary delays as transfers would be done within the network.
The announcement claims that digital cash adoption would increase the country’s GDP by at least 3%. It also highlighted reduced maintenance and printing costs as a significant benefit of this digitization. The BOK hopes to increase the efficiency of negative interest rates and currency circulation using this technology.
The CBDC War
The race for CBDC adoption is becoming fiercely competitive. China has maintained its lead with the launch of its digital yuan. One way it did this was via an airdrop to 50 thousand people through a lottery process.
Other trials were also carried out in neighboring regions like Beijing, Suzhou, and Shanghai. Meanwhile, other parts of the world outside Asia are shifting their attention towards their own CBDCs. Politicians and lawmakers have begun to realize the need to dominate this race for adoption.
U.S. Senator Cynthia Lummis has stressed the need for the US to lead the CBDC race. She emphasized a need to overtake China soon. In an interview, Lummis explained that she had started this process by ensuring that Wyoming, her home state, takes advantage of the nascent technology. It could achieve this by implementing crypto-friendly laws that would foster growth.
Similarly, the Bank of International Settlement (BIS) published the first results from its research on how the Swiss franc could be digitized.