The Bank of Korea has narrowed down three regions for the piloting of its central bank digital currency (CBDC), which does not include the country’s capital Seoul, according to a report from a local South Korean media outlet.
On July 31, it was confirmed that the Bank of Korea has chosen Jeju, Busan and Incheon as its candidates for the “private target CBDC test bed.”
Eventually, according to the report, the Bank plans to select one of the aforementioned regions, along with experimenting with payments and distribution at a public level and securing franchises that can accept payments via CBDC.
An official at the bank is reported to have said:
“The CBDC electronic wallet app will allow not only local residents but also many civilians, such as tourists to [partake].”
The Bank of Korea said that the regional closed tests of the CBDC will be similar to the issuance and distribution of the current local currency scheme in place in various regions of South Korea.
The local currency scheme was introduced during the COVID-19 pandemic as a basic income and relief payment solution. Jeju, Busan and Incheon – the regions mentioned as candidates for the pilot – all current issue and distribute their own local currencies such as ‘Tamranjeon’, ‘Dongbaekjeon’, and ‘Incheon e-Eum’, respectively.
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An official from a commercial bank in Korea is reported to have said that in Busan the number of eligible citizens is “so large that the Bank of Korea is burdened in many ways” and therefore the choice was “greatly inclined” to Jeju which has the second largest population.
According to the local report, the local currency scheme has fewer “technical barriers” to overcome compared to CBDCs.
Multiple banks in South Korea have released information that they are conducting research on stablecoins as CBDC alternatives for efficiency purposes.