South Korean Central Bank Steps up CBDC Work ‘in Response to COVID-19’

The South Korean central bank has sped up its digital currency issuance progress, per a new report, with officials to begin a tech review several months ahead of schedule.

According to Chosun, the central Bank of Korea (BOK) says it has conducted a study of the technological advances required in order to roll out a digital version of the country’s won fiat, paying particular attention to the IT solutions proposed by central banks in “14 nations, including the United Kingdom, Norway, Sweden, Switzerland, Japan and China.”

As previously reported, the BOK last month rolled out a timetable for digital currency issuance, stating that it intended to start its technical review “before the end of 2020” – an indication that the BOK is already well ahead of its initial timeframe. The move completed an incredible u-turn for the BOK, which some six months ago was writing off the need to develop a South Korean central bank digital currency (CBDC).

Chosun believes that the government’s willingness to drive up “contact-free” and “non-face-to-face” settlement solutions in the wake of the coronavirus pandemic is spurring the BOK on as it rushes to beat its own self-imposed deadline.

The BOK has already stated that its tech review will be followed by a pilot, originally slated for some time in 2021. However, if the central bank stays ahead of schedule, there is a chance that this pilot could be conducted before the end of 2020.

The same media outlet quotes a BOK official as stating that although the bank has yet to finalize its model for its digital currency, it is “likely” to focus on micro-financial solutions rather than macro-financial payments – a suggestion that Seoul does not envisage using the digital won in major trade deals.

However, many observers believe that the BOK’s fast-track progress may be influenced by developments in nearby China, where multiple digital yuan pilots have rollout out in testbed communities this month.

Reporters have suggested Seoul is wary of losing out in a tech race with China, and hopes to have its own digital currency ready for rollout ahead of most European and other Asian nations.