The South Korean government, through their central bank, the Bank of Korea, will reportedly introduce their own digital currency next year, and will test the effectiveness of its use by 100,000 selected individuals.
The Bank of Korea will use the concept of Central Bank Digital Currency (CBDC), which is a concept of digital currency issued by the central bank itself, and not digital banks that use their own digital money.
This pilot project, which is expected to start in the fourth quarter of 2024, will see the Bank of Korea issue a deposit token issued in the form of CBDC, and will be distributed to selected local banks, which will then be given to 100 thousand selected users who will allowing these users to shop at the stores there.
According to a report from The Korea Times, this digital currency can be used in the same way as the voucher system used during the COVID-19 outbreak, but with various challenges and obstacles reduced, such as high transaction fees, slow transaction verification and cases of fraud.
Even so, for this CBDC pilot project, the use of this digital currency is limited to the purchase of goods only. For the duration of the project, services such as remittances using CBDC are not allowed.