South Korean internet companies vie for digital currency pilot

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Affiliates of the two largest internet companies in South Korea are thought to be among the favored candidates to run the country’s upcoming central bank digital currency (CBDC) pilot, according to local media reports.

Subsidiaries of Naver and Kakao are reported to have submitted proposals to run the 10-month blockchain pilot program, which will aim to test the feasibility of a central bank digital currency in a simulation.

The Bank of Korea has received bids from Kakao’s blockchain subsidiary Ground X, and from the Naver-affiliated Line Plus. The central bank is now narrowing down the field, with imminent plans to select the winning bid to run the pilot scheme. The pilot is expected to run until June 2022, with a budget of 4.96 billion won ($4.3 million).

The pilot program will test the CBDC, dubbed the digital won, in a virtual environment powered by distributed ledger tech. The bank will use the pilot scheme to explore different applications of the CBDC, including issuance, redemption, electronic payments and settlement, as well as rights management for digital media and copyright.

The Bank of Korea first launched its bidding process for the contract back in May, seeking a tech partner to help explore the benefits and implications of a CBDC launch. In common with central banks around the world, the Bank of Korea has been keen to investigate a central bank digital currency, powered by blockchain technology.

Back in February, the central bank published a book on central bank digital currencies, in which it first announced its own plans for launching a digital currency in South Korea.

With a decision now imminent, it looks as though South Korea is about to embark on the next stage of its journey towards launching a central bank digital currency.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

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