Bank of Korea Opens Bids for CBDC Research Project Contractor... "Not a Premise for Introduction"

[Asia Economy Reporter Eunbyeol Kim] The Bank of Korea has begun bidding for a research service provider to conduct a pilot test of a central bank digital currency (CBDC). However, the Bank clarified that this pilot test is not premised on the introduction of a CBDC but is a preparatory step for its potential adoption in the event of a rapid decline in cash usage.

On the 24th, the Bank of Korea published a request for proposals on the Public Procurement Service's Nara Marketplace website to select a research service provider for the CBDC pilot test. The project period is 10 months from the start date, and the bidding method is an open competitive (lump sum) bid, with the provider selected through technical evaluation and negotiation.

The Bank of Korea is conducting research to proactively review institutional and technical requirements related to CBDC in preparation for changes in the future payment environment. In March, it completed the "CBDC Business Process Analysis and External Consulting," and based on this, it plans to proceed with the "CBDC Pilot Test Research" service project.

Through this project, the Bank plans to create a CBDC pilot test environment operating in a virtual cloud space, assess the usability of the CBDC, and conduct performance tests on related IT systems. The pilot test environment will be built on an open-source CBDC platform to avoid dependence on specific IT companies or private digital currencies, ensuring independent CBDC technology research.

Yu Hee-jun, head of the Digital Currency Technology Division at the Bank of Korea's Financial Settlement Bureau, stated, "In this environment, we will verify the technical feasibility of basic CBDC functions (issuance, distribution, redemption, etc.) and extended functions (offline payments, digital art purchases, etc.), and identify additional technical experiments needed to continuously conduct related tests."

The pilot test research project will be carried out in two phases to ensure stability and efficiency. Phase 1 will mainly focus on establishing a distributed ledger-based CBDC pilot test environment and verifying the technical feasibility of basic functions (issuance, distribution, redemption, etc.). Phase 2 will review the applicability of new technologies such as central bank business expansion, offline payments (payment functions in communication failure or other disruption environments), digital asset purchases, and enhanced privacy protection technologies for CBDC extended functions.

The Bank of Korea's budget for the CBDC pilot test research amounts to a total of 4.96 billion KRW. Companies eligible to participate in the bidding must submit proposals and necessary documents to the Bank of Korea.

Yu said, "We plan to sign a contract with the research service provider after technical evaluation and negotiations in July and commence the pilot test research in August. By December, we aim to complete the establishment of the pilot test environment and the Phase 1 experiment on basic CBDC functions, with Phase 2 experiments to be conducted by June next year."

However, the Bank emphasized that this CBDC pilot test is not premised on its introduction. Yoon Sung-kwan, head of the Bank's Digital Currency Research Team, said, "Basically, as the proportion of cash usage is rapidly decreasing, this is to ensure that the CBDC can safely fulfill its role when cash usage declines. Since the future is unpredictable, no one can accurately forecast when it will be introduced, but the current preparations are aimed at responding to rapid changes in the payment environment."

This content was produced with the assistance of AI translation services.