The Bank of Korea (BOK) rolled out details on its pilot program for its retail central bank digital currency (CBDC), stating that 100,000 selected Korean citizens will join the trial in the fourth quarter of next year.
The participants will be able to buy goods with tokens in the form of CBDC issued by commercial banks. The central bank said that a digital currency could solve issues with existing voucher systems, which are special government grants. The challenges include “high transaction fees, complicated and slow processes, limited post-transaction verifications and concerns over fraudulent claims.”
The announcement came a day after AgustÍn Carstens, the general manager of the Bank of International Settlements, visited Seoul.
Last month, South Korea’s central bank outlined its wholesale CBDC pilot plan to support tokenized deposits in commercial banks and explore new forms of financial products. This distinction between wholesale CBDC and retail CBDC is important. Financial institutions and interbank settlements primarily use a wholesale CBDC, whereas individuals and businesses use a retail CBDC for daily transactions.