The Bank of Korea has completed the first and second phases of its retail central bank digital currency (CBDC) simulations and is now progressing to real-world tests involving at least ten commercial banks, Aju Economy reported. Those banks will include Shinhan Bank and NH Nonghyup Bank.
The central bank plans to publish a report on the digital won after completing its research later this year.
Testing with commercial banks will focus on researching remittances and payments between users to verify interoperability between the CBDC and the financial institutions’ IT systems.
It’s been almost a year since the Bank of Korea selected its CBDC vendor, Ground X, the company that founded the Klaytn public permissioned blockchain. Klaytn is derived from Ethereum technology, as is the permissioned CBDC blockchain.
In the second half of last year, the central bank’s first research phase involved testing basic CBDC functionality such as creation, issuance and redemption of the CBDC and enabling end-users to make payments using wallets.
During the first half of 2022, it entered the second phase focusing on more advanced functionality. This included offline payments, using the digital currency to buy tokenized items such as artwork, and cross border CBDC remittances.
It’s unclear how Korea tested the cross border CBDC remittance. Several countries are involved in cross border CBDC trials, but in a G20 report on the topic published yesterday, Korea was not mentioned as a participant. However, the Bank of Korea has a representative in the Future of Payments working group.