The Bank of Korea (BOK) is preparing to launch a groundbreaking pilot program in early April, involving 100,000 participants to test its central bank digital currency (CBDC) in real-world transactions. Known as Project Hangang, this three-month initiative will run through the end of June and will include the participation of seven major South Korean banks, such as KB Kookmin, Shinhan, Hana, Woori, NH NongHyup, BNK Busan Bank, and the Industrial Bank of Korea.
During the pilot program, participants will convert their traditional bank account deposits into deposit tokens, which can then be used for daily purchases at selected merchants through banking apps that support QR code payments. Each individual will be limited to holding up to 1 million won (~$690) worth of tokens, with a cumulative value of 5 million won for the duration of the pilot.
Merchants participating in Project Hangang include popular retailers like 7-Eleven, Hanaro Mart, Kyobo Bookstore, and Ediya Coffee, as well as online platforms like Hyundai Home Shopping. The main objective of this initiative is to assess the feasibility of CBDCs in simplifying current payment and settlement systems, potentially reducing transaction fees by enabling real-time merchant settlements.
The BOK is set to publicly invite participants for Project Hangang later this month. A BOK official highlighted that the pilot program aims to streamline transactions by minimizing intermediary roles, evaluating the practical efficiencies of a CBDC model compared to traditional banking processes.
This real-world testing phase builds upon South Korea’s previous CBDC research efforts and signifies a significant advancement towards integrating CBDCs into daily economic activities. The pilot aligns with global initiatives led by institutions like the Bank for International Settlements (BIS), which anticipate widespread adoption of CBDCs for both retail and wholesale purposes by 2030.
The experiment represents a shift from theoretical modeling to practical application, positioning South Korea as one of the countries actively exploring the potential of CBDCs for retail use. As the pilot program progresses, it will provide valuable insights into the benefits and challenges of implementing a CBDC system in a real-world setting.
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