South Korea’s central bank, the Bank of Korea (BOK), announced that it is currently seeking to assess the functionality of establishing a pilot digital currency platform. According to BOK, this move enables it to move closer to its goal of launching a central bank-supported electronic currency.
Over the recent years, bitcoin and other cryptocurrencies’ popularity have grown rapidly and extensively. After the large-scale growth of digital asset usage, cryptocurrencies have launched a cutthroat market competition against traditional cash. This new market condition could also significantly alter how the current financial sector functions.
Furthermore, BOK shared its plans to create a central bank digital currency (CBDC). To this end, BOK continues to take bids, looking for partners that would supply the project’s needed technologies. In line with its plans to launch an electronic currency platform, BOK and its tech partners would study digital won’s effectiveness and practicality.
A BOK official stated that all its current moves coincide with its preparation to tackle the rapidly changing payment systems. BOK said that the pilot CBDC would conduct simulations for retail outlets and commercial banks. It would also incorporate deposit operations, mobile phone payments, money transferring, and more.
Financial Services’ Global Digitalization
BOK also emphasized it would conduct the CBDC trial runs to evaluate the existing electronic currencies’ capabilities and performance. After the tests, BOK would utilize the accumulated data to establish cryptocurrencies as day-to-day goods and services remittances. BOK would begin the CBDC trial run from August 2021 to June 2022.
At present, South Korea ranks as the fourth-largest Asian economy, making it one of the most suitable test market environments. As one of the most technologically advanced nations globally, South Korea has also participated in the cryptocurrency adoption initiative. It would be joining other nations in paving the way for digital currency implementation, further advancing global digitalization.
Worldwide central banks also continue to observe and invest in electronic currency development to modernize existing financial systems. For instance, China is readying to deploy a digital yuan currency officially before 2021 ends. Similarly, Pakistan is at the preparation stages to launch a digital fiat, while Britain plans to establish a digital pound.
Additionally, the Bank for International Settlements’ (BIS) survey results indicated that 86% of the participating banks already began adopting cryptocurrencies. 15% of the participants have also conducted trial runs for the digital asset application. BIS also expects central banks that service one-fifth of the global population to launch locally developed electronic currencies.
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