South Korea's Upcoming Tokenized Deposit Pilot Programme in 2024

South Korea's Ambitious Tokenized Deposit Pilot Launches in 2024

South Korea is gearing up to launch a significant tokenized deposit pilot program by the end of 2024, targeting around 100,000 participants. Initially slated for a September or October 2023 launch, the pilot program has encountered minor delays, but it remains set to achieve a notable milestone on a global scale.

What is the Tokenized Deposit Pilot?

The program involves a unique voucher-like system that enables users to make purchases at convenience stores, enhancing the usability of digital currency in everyday transactions. This innovative initiative is a part of the Bank of Korea's (BOK) broader plan for wholesale central bank digital currency (wCBDC), designed specifically to facilitate interbank tokenized deposit settlements.

Participating Institutions

Six major commercial banks are currently participating in the pilot:

• Hana Bank
• Korea Development Bank
• KB Kookmin Bank
• NH NongHyup Bank
• Shinhan Bank
• Woori Bank

The Korea Financial Telecommunications and Clearings Institute (KFTC) will oversee the management of smart contracts associated with the initiative. A banking industry insider has noted that even with the delay, successfully launching the pilot involving such a large user base would mark a significant achievement in the global financial landscape.

Global Collaboration and Cross-Border Payment Projects

In addition to the tokenized deposit pilot, the Bank of Korea is collaborating with the Bank for International Settlements (BIS) on various cross-border payment projects. One such initiative is the Agorá project, which encompasses seven central banks and 41 institutions, with the aim of tokenizing correspondent banking services.

As South Korea positions itself as a vital player in the evolving digital currency space, it is also serving as an observer in another BIS cross-border payment initiative known as mBridge, further enhancing its commitment to exploring advanced financial technologies.

Conclusion

This pilot program signifies South Korea's commitment to advancing its digital currency landscape and improving payment systems. With the involvement of major banks and international cooperation in cross-border payments, the future of tokenized financial services looks promising in South Korea.

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