South Korea starts extensive pilot tests for digital central bank currency Hangang between April and June

<p> <strong> South Korea starts extensive pilot tests for digital central bank currency Hangang between April and June </strong> </p>

Bank of Korea starts pilot project for digital central bank currency

The Bank of Korea (BOK) has announced that from April to June 2023, testing for your project for the digital central bank currency (CBDC) with the name "Hangang". This pilot project is expected to include 100,000 participants and is launched in cooperation with the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS). Seven large South Korean banks will take part in the project, including Kookmin, Shinhan, Woori, Hana Bank, the Industrial Bank of Korea, Nonghyup and Busan Bank.

Goals of the pilot project

The goal of the "Hangang" project is to test the feasibility of the CBDC. This includes technological experiments, for example the integration of the CBDC into a simulation system for trade in carbon emissions. Participants in the pilot project will have the opportunity to convert their bank deposits into tokenized inputs to pay local providers such as convenience stores, cafés, supermarkets and online shops. The organizers admit that mobile banking apps will also enable payments via QR codes.

The BOK has also stipulated that the maximum amount of deposit stakes that a single participant can hold is one million won (about $ 689). However, the participants will also be allowed to increase their deposit token upper limit up to five million. The tokenized bank deposits can also be converted into cash again.

Technological developments and advantages

The Bank of Korea will use "Hangang" to check whether the distributed main book technology can replace the traditional comparison methods of local banks based on the reserves of the central bank. A representative of the bank emphasizes that the use of tokenized deposit payments can reduce the participation of third parties in transactions, which means that dealers are able to receive real-time payments.

The pilot project also aims to improve the efficiency of voucher management. The FSC plans to implement a digital voucher management platform on which the government can distribute and manage vouchers. According to previous information, these vouchers will use the specific money model of Singapore (PBM). The PBM model includes the deposited token into an intelligent trac that defines the terms of use of the token.

other perspectives

In addition to the above applications, BOK outlines two other potential applications for virtual currencies. This includes an e-money token, which is fully supported by the WCBDC (Wholesale Central Bank Digital Currency) and is based on a common capacity. The bank believes that e-money tokens could be issued by commercial banks and possibly also by other payment service providers.

The pilot project "Hangang" of the Bank of Korea represents an important step towards the establishment of digital currencies in the South Korean financial system and is observed closely to assess the effects on future monetary policy and the financial sector.