South Korea is one of the leading nations when it comes to blockchain and cryptocurrency adoption and implementation. The nation’s central bank is now ready to move forward in the Central Bank Digital Currency (CBDC) race as reports state it is set to test its digital currency for pilot transactions next year.
According to a Wednesday report from state-run news agency Yonhap, the Bank of Korea has successfully completed the design and development of its digital Won and is now ready to focus on testing it.
The development comes as a move to compete with China and its rapid development of its CBDC. China has already conducted several close circuit tests across the nation in collaboration with banks and private firms.
South Korea started to accelerate its work on a CBDC in March after it launched a 22-month CBDC pilot scheme. According to the roadmap presented at launch, distribution is the final phase of the program, and it is on schedule so far.
The bank completed phase one that comprised of designing and reviewing the technology required to implement the CBDC back in July.
The second phase started at the end of August and is currently underway. In this phase, the bank will collaborate with an outside partner to focus on an analysis of the business and related processes.
Digital Won not coming next Year
The current phase is expected to run until the end of this year, and 2021 will see the final build and distribution phase.
As a part of the testing phase, the central bank said it would simulate transactions on a blockchain platform that would resemble cash or a traditional means of payment. The central bank is also expected to use blockchain technology to manage CBDC test transaction details.
According to an official:
“The CBDC will be issued and circulated in the virtual world and we are going to test a number of transaction scenarios under a variety of circumstances.”
However, the bank continues to stress on the fact that tests do not necessarily mean it will go ahead with the CBDC launch. It plans on becoming fully prepared to deploy a CBDC if market conditions, locally or globally, compels it to do so.
A similar sentiment was portrayed by the European Central Bank as it said in a report that it hasn’t finalized the issuance of a CBDC but would be “prepared to issue [CBDC]…should the need arise.”