Bank of Korea Launches CBDC Pilot for 100,000 Users
By: Isha Das
The Bank of Korea (BOK) has taken a significant step forward in the realm of digital finance by launching a real-world pilot program to test its central bank digital currency (CBDC). This initiative, engaging 100,000 participants, is set to commence in early April. Dubbed Project Hangang, the three-month pilot will extend through the end of June 2025 and involves a consortium of seven South Korean banks including KB Kookmin, Shinhan, Hana, Woori, NH NongHyup, BNK Busan Bank, and the Industrial Bank of Korea.
Participants in the program will have the ability to convert funds from their conventional bank accounts into deposit tokens. These tokens can subsequently be used for everyday purchases at participating merchants via banking apps that support QR code payments. Each participant's token holdings will be capped at 1 million won (~$690), with an overall cumulative limit of 5 million won for the duration of the pilot. Notable merchants involved include 7-Eleven, Hanaro Mart, Kyobo Bookstore, and Ediya Coffee, alongside online platforms such as Hyundai Home Shopping.
The primary objective of this initiative is to evaluate the feasibility of CBDCs in streamlining current payment and settlement systems and potentially lowering transaction costs via real-time settlements. The BOK aims to minimize intermediary roles within transactions, assessing whether a CBDC can offer practical efficiencies over traditional banking processes. Public solicitation for participants is expected to commence later this month.
This initiative by South Korea aligns with previous CBDC research efforts and global trends, aiming at integrating CBDCs into routine economic activities. The pilot is a notable shift from theoretical discussions to practical implementation, positioning South Korea among the growing list of nations keen on exploring retail CBDCs. This move is part of a larger global strategy for the adoption of CBDCs, spearheaded by key institutions like the Bank for International Settlements, projecting significant uptake by 2030.
