South Korea Launches CBDC Trial with 100,000 Consumers

South Korea is embarking on a significant milestone in the realm of digital currencies with the commencement of a Central Bank Digital Currency (CBDC) trial involving 100,000 consumers. This trial, which could begin as early as this month, marks a pivotal step in the country's exploration of CBDC, a project that has been under study since 2021. The Bank of Korea, the nation's central bank, has been meticulously preparing for this real-world test, which was initially slated for late last year but was postponed to ensure seamless coordination among all participating institutions.

The trial will involve seven major banks, including KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup, along with Industrial Bank of Korea and Busan Bank. These financial institutions will issue deposit tokens based on CBDC, which consumers can use to make purchases at various merchants. The tokens, valued up to 1 million won per person, will be distributed through electronic wallets, allowing users to make payments by displaying QR codes at designated locations.

Merchants participating in the trial include prominent names such as the 7-Eleven convenience store chain, Kyobo Book Centre, and the food delivery app “Ddaenggyeoyo.” Additionally, the “Seoul Youth Culture Pass” program will also accept these digital tokens, further expanding the scope of the trial. The Bank of Korea has bolstered its capabilities for this test by establishing a new Digital Currency Research Office and increasing its staff to manage CBDC-related projects effectively.

The three-month trial aims to evaluate the smooth functioning of three key stages: the issuance of deposit tokens by banks, consumer purchases using these tokens, and the subsequent payment to merchants. The success of this trial could accelerate discussions about the official introduction of CBDC in South Korea. However, the Bank of Korea will conduct a thorough review of the results to assess the system's utility and security before making any definitive decisions.

This trial is garnering global attention, with institutions like the Bank for International Settlements (BIS) closely monitoring the outcomes. The BIS, which facilitates collaboration among central banks, recognizes the significance of South Korea's CBDC experiment in the broader context of global digital currency development. The insights gained from this trial could provide valuable lessons for other countries exploring similar initiatives.

A Bank of Korea official highlighted the potential benefits of CBDC, noting that its introduction