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South Korea’s central bank moves to develop pilot digital currency

South Korea’s central bank on Monday, May 24th, said it will choose a technology supplier to build a pilot platform for a digital currency, moving a step closer to creating a central bank-backed digital currency.

An open bidding process is going to be employed by the Bank of Korea to choose a tech partner for studying the practicalities of launching a central bank digital currency in a test environment.

The BOK’s efforts come as the spread of bitcoin and other cryptocurrencies has opened up the possibility that competitors of traditional cash could change how the financial sector operates.

Central banks from China to Britain and Sweden are looking at developing digital currencies to modernise their financial systems, ward off the threat from cryptocurrencies and speed up domestic and international payments.

“The steps we are taking now are to prepare for the changes in the payment settlement system, changing rapidly,” a BOK official told a news conference.

The platform will contain simulations of commercial banks and retail outlets, and the trials will include payment via mobile phones, fund transferring and making deposits, the BOK said.

The pilot program is scheduled to run form August to December, 2021. It could be expanded to a second phase in 2022.

Sources: Reuters, The Straight Times