The Bank of Korea has unveiled its selection of three regions for potential testing of the central bank digital currency (CBDC) in South Korea, with the country’s capital city, Seoul, conspicuously absent from the list. The chosen regions, comprising Jeju, Busan, and Incheon, have been identified as potential candidates for the “private target CBDC test bed” in partnership with commercial banks. The pilot program is slated for development in the coming year.
The decision to exclude Seoul from the shortlist comes amidst the South Korean government’s comprehensive efforts since 2020 to develop the digital won. The selected region from the trio will play a crucial role in testing the public distribution process and evaluating the practicality of CBDC as a means of payment.
Jeju appears to be a leading contender for the CBDC pilot due to its favorable population size, whereas logistical challenges associated with Busan influenced its selection. The testing process is expected to mirror the issuance and distribution structures of existing local currencies introduced during the COVID-19 pandemic to stimulate regional economies.
Notably, all three chosen regions are already issuing their own local currencies (“Tamranjeon,” “Dongbaekjeon,” and “Incheon e-Eum”), a potential factor in their selection for the CBDC pilot. The Bank of Korea envisions the CBDC electronic wallet to be accessible to both local residents and tourists, with major supermarkets and distribution companies playing a pivotal role in its implementation.
