The Bank of Korea (BOK) is set to initiate a pilot program for its central bank digital currency (CBDC), named "Hangang," involving 100,000 participants.
The Bank of Korea (BOK) is set to initiate a pilot program for its central bank digital currency (CBDC), named "Hangang," involving 100,000 participants.
Scheduled to run from April to June this year, the pilot will allow citizens to convert their bank deposits into tokenized deposits for use in local transactions, according to reports from local media.
Participants in the program will be able to utilize mobile banking applications equipped with QR payment functions to make purchases at various vendors, including convenience stores, coffee shops, supermarkets, and online shops. The BOK aims to evaluate the feasibility of distributed ledger technology as a replacement for traditional settlement methods currently employed by local banks, which depend heavily on central bank reserves.
The pilot will involve collaboration with seven major banks, including KB Kookmin, Shinhan, Hana, and Woori Bank. Each participant will be allowed to hold up to 1 million Korean won in tokenized deposits, approximately equivalent to $689.
There is also an option to top up this limit to 5 million won, and participants will have the ability to convert their tokenized deposits back into cash.
A BOK representative indicated that tokenized deposits could reduce the need for intermediaries in financial transactions, enabling merchants to receive real-time settlements.
While the BOK progresses with its CBDC initiatives, it has clarified that it is not considering creating a Bitcoin reserve within its foreign exchange holdings, citing that Bitcoin does not meet International Monetary Fund (IMF) standards for such reserves.
However, the central bank intends to monitor ongoing discussions about the potential inclusion of virtual assets in foreign exchange reserves.
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