South Korea’s central bank has put its digital currency project on hold, signalling an uncertain future for the country’s Central Bank Digital Currency (CBDC) plans. As per a Bloomberg report, the Bank of Korea (BoK) has ceased discussions on the project for the time being with the involved banks.
An official from the bank confirmed that they have also put a stop to the preparations for the second phase of their digital currency trial, which was initially set to take place in the fourth quarter of 2025.
FinanceMagnates.com previously reported that the initial phase of CBDC simulation testing, which included the evaluation of the currency’s basic functions such as creation, distribution, and issuance, was completed by South Korea’s central bank in December 2021.
The exploration of a digital rendition of the won began in April 2020 by the BoK. Despite this, they made it clear that these tests did not indicate an intent to launch a CBDC.
While the future of the country’s CBDC hangs in the balance, other nations continue to pilot digital currencies. To date, three countries – the Bahamas, Jamaica, and Nigeria – have successfully launched digital versions of their national currencies.
The decision to pause testing has been linked to a shifted focus towards the burgeoning stablecoin market, spearheaded by President Lee Jae Myung. He has expressed interest in supporting stablecoin-involved companies and has proposed a bill that would allow firms with equity as low as 500 million won (US$370,000) to launch won-pegged stablecoins.
South Korea is not the only country recognizing the potential of stablecoins. The recent initial public offering (IPO) of Circle, the company behind USDC, indicates a growing acceptance of these currency-pegged tokens. In the United States, the Senate recently approved the “Guiding and Establishing National Innovation for US Stablecoins” or GENIUS Act, which is now awaiting a House vote.
