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South Korea's Central Bank, the Bank of Korea, has announced the shortlist of potential regions for their inaugural Central Bank Digital Currency (CBDC) pilot. The capital city, Seoul, has been notably excluded from the list. The news was recently shared by a popular South Korean media outlet.
On the last day of July, it was revealed that Jeju, Busan, and Incheon have been considered as the primary candidates for the experimental CBDC project, which is being closely watched by financial industry professionals and economists.
This ambitious initiative's primary objective is to settle on one of the listed regions where the Bank can further delve into the intricacies of CBDC payments and distribution. It's also aiming to secure franchises willing to embrace CBDC payments.
A high-ranking official from the Bank of Korea shared insights about the accessibility of the proposed CBDC scheme. They explained that the intended CBDC app will extend its services not only to local residents but also a broader spectrum of users, including tourists.
The upcoming regional CBDC tests are designed to emulate the circulation of the current local currency system, a method deployed throughout various South Korean regions. This approach has been compared to the local currency system, implemented during the global COVID-19 crisis, to deliver basic income and relief payments.
The test bed candidates, Jeju, Busan, and Incheon, currently utilize their local currencies known as “Tamranjeon”, “Dongbaekjeon”, and “Incheon e-Eum”, respectively.
A representative from a leading commercial bank shared their perspective on Busan's candidacy. They indicated the city's massive population put pressure on the Bank of Korea, making Jeju, with its slightly smaller population, a more attractive option.
The report highlighted that implementing local currencies presented fewer technical challenges compared to the deployment of a CBDC.
As South Korea navigates its way towards the future of financial transactions, multiple domestic banks are investigating the utility of stablecoins, viewed as more efficient alternatives to CBDCs.
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