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    Bank of Korea announces completion of the first phase of its digital currency pilot

    Bank of Korea announces completion of the first phase of its digital currency pilot

     

     Bank of Korea has reported to have been successful in the completion of its first phase of central bank digital currency mock testing that has initially started in August 2021. 

     

    The country’s central bank has said to the media about its first phase of CBDC mock testing, suggesting that the second phase is currently underway, as reported in the YNA news service. 

     

    The first phase of CNDC’s mock test had involved some very basic functions of the sovereign digital currency concerning distribution and issuance.

     

    The second phase of the CBDC pilot is set to test real-world functionalities, including cross-border remittance, offline payments and retail payments.

     

    Speaking to the media, the bank has stated that they would confirm the possibility of operating various other functions, that include offline settlements, the application of new technologies intended to strengthen privacy protection.

     

    Bank of Korea is also reported to have been looking to onboarding financial institutions for its second phase, which is quite similar to what China is presently doing with its digital yuan. However, the Korean bank, unlike China, is planning to issue digital currency that also focuses on user privacy.

     

    The second phase of the pilot is expected to finish by June 2022, after which the central bank has planned working on an official launch and commercialization plans. 

     

    South Korea is among the latest nations that have joined a limited number of countries that have either initiated or are due completion of their pilot phases of CBDC testing. According to data from the Atlantic Council, 91 nations are currently working on their sovereign digital currency from which 14 have reached the pilot phase. 

     

    In the recent few years, South Korea has emerged as one of the leading crypto-compliant nations, which has recently also revealed its plans of becoming a world leader in the metaverse space as well. While China is at the forefront of the CBDC game, its European and Asian counterparts have also been accelerating their development plans for catching up with its pace.

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