South Korea’s Central Bank Completes First Phase of Its CBDC Pilot

South Korea’s central bank, the Bank of Korea (BOK) has successfully completed the first phase of its central bank digital currency (CBDC) pilot in December 2021, according to a report published on Monday. The first stage of the two-part mock test trial started in August 2021 which involved testing the most basic functions of the CBDC including its production, issuance, and distribution in a cloud-based environment. Once the second phase ends in June, the central bank plans to test its actual launch and commercialization including testing real-world usages like offline payments, cross-border remittances, among others. “We will confirm the possibility of operating various functions, such as offline settlements, and the application of new technologies, such as one intended to strengthen privacy protection during the second phase of the test,” the BOK said in the report. BOK’s pilot testing of digital currency kicked off in August last year in collaboration with tech giants like Kakao Corp,’s blockchain arm Ground X amid growing demand and usage of cryptocurrencies. This prompted the central bank to test its own digital currency and find an alternative for cash. “Central banks in major economies have been taking the stance that the digital currencies will replace cash rather than savings in banks. We are testing a slew of measures that could minimize the negative impacts of the digital currency on financial stability,” the BOK ad...