- South Korea’s FSC approves CBDC pilot with top banks to assess digital tokens in daily transactions and deposits.
- Digital vouchers will replace traditional ones, enhancing convenience and efficiency in public service access.
- South Korea sets groundwork for CBDC and digital asset regulation, targeting comprehensive rules by 2025.
The Financial Services Commission of South Korea has given approval for a pilot program related to the CBDC with seven of the country’s leading financial institutions. This program launched by the FSC on 6th of November aims to explore the practicality of CBDCs and deposit tokens in regular transaction and deposit processes.
According to a recent report, the pilot program has key players like KB, Shinhan, Woori, and Hana banks which have the authority to provide the deposit tokens. These tokens are digital assets collateralized by the bank deposits of customers and enable users to transact in a digital manner. The FSC wants the country to find out how these tokens could make these digital financial services easier to use for South Koreans and this can be seen as another big step in the country that is already embracing CBDC technology in its digital finance solutions.
CBDC Powered Digital Vouchers
Another important factor of this pilot is that physical vouchers are to be replaced with the digital vouchers which have been used in South Korea for a long time to access public services. The FSC pointed out that the digital vouchers, which would be stored on a secure distributed ledger, might add value to users in terms of convenience and speed. As a result, the initiative is to create a blockchain-based infrastructure to improve the efficiency of the interaction with public services.
In this pilot, the FSC also launched the digital voucher management system, which would help government authorities to issue and monitor vouchers electronically. This platform may create the foundation for the increased use of CBDCs within government and public service networks. Nonetheless, the FSC has not given a schedule for the implementation or the finalization of the program even though the infrastructure is clearly in the process of development.
CBDC Regulatory Framework
This pilot is but one example of a larger effort by South Korea to ensure that it is ready to regulate the emerging digital financial landscape. The FSC has provided further information that enhancing the existing legislation on cryptocurrency and digital assets is high on the agenda.
As reported earlier by CWJ, the South Korean government is planning to enforce new rules regarding the use of digital assets and cryptocurrencies across borders. The new regulatory measures which include strict registration and filing procedures shall commence in the second half of 2025.
With these measures, South Korea wants to build its capacities in CBDC and strengthen the current legal framework for digital assets so that the financial sector is well protected as more people turn to digital money solutions.
