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According to the latest reports, the Bank of Korea has completed the first stage of the CBDC pilot project last December. The second phase is expected to end by June 2022. The bank is yet to test the potential of CBDC to work in a real-world environment.
In a report published on Monday, the Bank of Korea said that the first phase of the central bank digital currency (CBDC) was completed successfully in December. The testing that started in August 2021 involved examining the essential functions of a CBDC, including its manufacturing, issuing, and distribution in a simulation environment. As a result, the report deduced that the CBDC “works normally” under test conditions.
The second phase of the testing, which is expected to end by June 2022, will assess real-world functionalities of CBDC, such as cross-border remittance, retail payments, and offline payments. In addition, the bank stated, “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.”
In another statement, the South Korean Central Bank has said that further experiments are required to confirm if CBDC will perform effectively in a natural environment.
After completing the second phase, the bank has plans to test the project and continue usability experiments and is seeking cooperation with financial institutions. Bank of Korea started working on the CBDC pilot project in 2020 and planned to launch and commercialise after the second phase.