Bank of Korea to Select Up to 100,000 General Public Next Year for Digital Currency Experiment with Voucher Function Applied

On the 23rd, BOK-FSC-FSS Announce Detailed Plan for 'CBDC Usability Test'
Service Improvement Focused on Public Voucher Payment
Recruiting Users Through Participating Banks in the Test

The Bank of Korea announced that it will conduct a three-month CBDC (Central Bank Digital Currency) real transaction test targeting up to 100,000 general public participants in the fourth quarter of next year. User applications will be accepted through participating banks around September to October next year, and the test will focus on a new digital voucher function.

On the 23rd, the Bank of Korea held a joint press conference with the Financial Services Commission and the Financial Supervisory Service to announce detailed plans for the ‘CBDC Usability Test.’ The real transaction test will focus on improving existing systems. By applying the digital voucher function to CBDC-based deposit tokens using programming features, it is highly likely to improve issues currently pointed out in public vouchers, such as high fees, complex and slow settlement processes, limitations of post-verification methods, and concerns about fraudulent claims.

The detailed plans announced this time include the test target use cases and the direction for selecting participating banks, finalized through consultations with related institutions. Banks can issue deposit tokens through the financial regulatory sandbox and will perform roles such as recruiting and managing experiment participants including individuals and stores, developing user wallets, and paying usage fees. Participating banks for the real transaction test will be finalized by the end of the third quarter of next year after going through related procedures such as the financial regulatory sandbox. Regarding user selection criteria, Kim Dong-seop, head of the Bank of Korea’s Digital Currency Planning Team, said, "It will be decided in detail depending on which voucher program is implemented."

Example of a real transaction test configuration using the digital voucher function.
Image=Bank of Korea

The test will be composed of issuance, distribution, and payment stages. First, at the request of the issuing agency, banks will issue deposit tokens with digital voucher functions, users will use them to purchase goods at usage locations, and then payments will be made to the usage locations.

First, the Bank of Korea, the Financial Services Commission, and the Financial Supervisory Service will propose pilot projects jointly conducted by the participating banks after consultations with related institutions and legal reviews. In addition, each participating bank will be allowed to propose individual projects related to voucher functions either independently or jointly. Considering the purpose of the test, during the test period, deposit tokens will only be usable for payment through the digital voucher function, and transfers between individuals will not be permitted.

In addition to the real transaction test, technical experiments will be conducted in a virtual environment. Separate from the real transaction test, three use cases have been selected focusing on checking the technical feasibility of issuing and distributing new types of financial products. All banks wishing to participate can join the technical experiments in the virtual environment, and applications will be accepted until mid-December.

New Form of Asset (Carbon Emission Rights) Distribution Technology Experiment Plan. / Image=Bank of Korea

First, in cooperation with the Korea Exchange, the plan is to link the CBDC system with an external distributed ledger system (a simulated carbon emission trading system) to verify whether simultaneous settlement between carbon emission rights and special payment tokens occurs properly. Also, in cooperation with the Korea Financial Telecommunications & Clearings Institute, a scenario will be assumed where a virtual issuer issues tokenized assets to the public in a public offering form. Deposit tokens corresponding to the subscription application amount will be restricted from disposal, and after final allocation, only funds corresponding to the allocated amount of tokenized assets will be transferred by implementing a smart contract mechanism.

Furthermore, to more concretely implement the integrated ledger concept proposed by the BIS, the Bank of Korea plans to conduct an experiment where it issues virtual securities digitally within the CBDC system and financial institutions simultaneously settle these securities using institutional CBDC.

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