Bank of Korea Advances to Second CBDC Testing Round as It Considers Digital Subsidy Distribution to Cut Administration Costs

The latest update from COINOTAG News, citing Decenter, reports that the Bank of Korea has dispatched a formal document to major banks outlining the second phase of CBDC testing. An official indicated that details on methods and schedules remain under discussion as the process unfolds.

In this round, policymakers are examining whether digital currency could underpin portions of government subsidies, with the aim of deterring misuse and trimming administrative costs associated with subsidy delivery through traditional channels.

Previously, the central bank launched a three-month CBDC pilot in April with seven participating lenders, but the project was suspended amid concerns about limited practical value and imposed costs amounting to billions of Korean won on banks.