SNEAK PEEK
- The central bank has finished an experiment of a digital South Korean won.
- The bank decided to enhance compliance by sacrificing privacy.
- Earlier in July, BoK shared that along with ten commercial banks, it was working on physical world tests of a CBDC.
According to a local media outlet, the Bank of Korea has originated as well as tested a program to ease cross-border remittances via connecting various CBDC or central bank digital currencies from other nations.
Governor Chang Yong Rhee shared that recently, the central bank had accomplished a 10-month experiment in a digital South Korean won. Moreover, the bank has tested usage of CBDC to buy NFTs.
The issuance of CBDCs has been explored by leading economies like the U.K., U.S. and European Union though China has conducted many trials. In 2021, South Korea started its CBDC trial and ended the first among the two phases by January.
Rhee shared that certain decisions in terms of a digital won needed trade-offs. He added:
We have realized that there is no such thing as perfect technology or CBDC designs that can satisfy all the various goals and expectations at the same time.
The Bank of Korea made a virtual money laundering as well as terrorism financing monitoring system and aims to ease submission of data.
In the experiment, it was observed that in one second, one CBDC can process over 2,000 transactions. Moreover, it also concluded that distributed ledger technology, as of now, lacks the stability required for a retail CBDC. Hence, utilizing the standard centralized ledger database is way better.
