Bank of Korea to test CBDC payments in supermarkets

South Korea’s central bank, the Bank of Korea (BOK), will launch a central bank digital currency (CBDC) trial in December, allowing 100,000 participants to use digital tokens for payments at supermarkets and convenience stores.

The Korea Times reported that the trial will involve converting bank deposits into digital tokens, which consumers can use for purchases at selected retail outlets.

The BOK is collaborating with six major commercial banks to issue a wholesale CBDC, which will then be converted into deposit tokens for participants.

These tokens will function similarly to vouchers and will be used to evaluate whether CBDCs can improve or replace existing bank transaction and settlement processes.

This initiative is part of the country's broader plan to explore a digital economy, initially announced in October.

Retailers are actively partnering with the participating banks to ensure smooth execution of the trial.

NH Nonghyup Bank is including its subsidiary Hanaro Mart, while other banks are negotiating with large convenience store chains and supermarkets.

The project’s goal is to assess the feasibility of using CBDCs in everyday transactions, focusing on whether the technology can provide a more efficient alternative to current payment systems.

The Bank of Korea is also a part of Project Agora, a global initiative aimed at exploring the tokenisation of cross-border payments.

This project includes six major Korean banks working together on innovative digital solutions.

According to a banking industry official, "While the timeline seems slightly delayed compared to our initial expectations, we are working to launch the CBDC test involving 100,000 participants using deposit tokens by the end of the year, which would be a globally significant milestone."