South Korea will launch a pilot project CBDC in one of three cities — Jeju, Busan or Incheon. The capital, Seoul, was not included in the list, according to Chosun.
The Bank of Korea plans to experiment with payments and the distribution of the asset at the state level. The regulator also intends to determine the franchises that will accept the digital won.
“The CBDC e-wallet application will allow not only local residents but also tourists to participate,” said a representative of the central bank.
Regional closed tests will be analogous to the issuance and distribution of the current fiat-money alternative schemes.
The aforementioned cities issue local currencies “Tamrandjon,” “Dongbekjon,” and “Incheon-e-Eum,” respectively. The initiative was launched during the COVID-19 pandemic as part of the implementation of basic income payments and social assistance.
The local-currency scheme has fewer “technical barriers” to overcome than a CBDC, according to the publication.
In July 2023, South Korean Hana Bank and Woori Bank began studying the so-called deposit certificates депозитных сертификатов. The institutions see them as an alternative to stablecoins and CBDC.
At the same time, the regulator said it would continue preparing for the potential rollout of a digital currency. The current phase includes studying the use of smart contracts, autonomous payments using NFC technology, and cross-border payments.