While the South Korean central bank has no immediate plans to introduce such a currency, the pilot scheme will ensure that it is prepared to do so in the face of changing market conditions.
22-month pilot scheme
Following theoretical research conducted in February 2020, the pilot will comprise a technological and legal review of CBDC issuance. It began in March and is scheduled to run for 22 months, through to December 2021.
The initial phase is to define the requirements and design of the CBDC, to run for five months until July 2020. This will overlap a review of the technology required to implement the currency, which is scheduled from April until August.
Following this, there will be an analysis of business processes, lasting until the end of 2020. Finally, the whole of 2021 should see a 12-month build and test of the CBDC pilot system.
No current plans to go live
The announcement made clear that the bank does not see an immediate need to release a digital currency in South Korea, rather that, based on other nations’ research in the field, it wishes to be prepared in case such a move becomes a necessity:
“The need to issue a CBDC in the near future still remains slim when considering the demand for cash that still exists, the competitive payment service market and high-level financial inclusion, but there is a need to be able to quickly take steps in case market conditions at home and abroad change rapidly.”
China’s central bank has emphasized that its top priority is the development of its CBDC, while the Bank of France is proposing to test the integration of CBDCs into interbank payments systems. Meanwhile, the head of the Philippines’ UnionBank has predicted the end of physical cash entirely.