South Korea's central bank is on track to test digital currency next year

The Bank of Korea, South Korea's central bank, is set to test digital currency for pilot transactions next year.

South Korean state-run news agency Yonhap reported the news on Wednesday, saying that the Bank of Korea has completed the design and technology review of its digital currency and will now focus on testing it.

The test would determine whether the digital won system operates normally in a "restricted environment." The Bank of Korea would be in charge of issuance and redemption of digital currency, while private financial institutions would manage its distribution, per the report.

"The CBDC [central bank digital currency] test system can be seen as the process of actually circulating cash," a Bank of Korea official told Yonhap. The central bank would reportedly use blockchain technology to manage CBDC test transaction details.

The Bank of Korea began its CBDC pilot program in April, and at the time, it said the plan would run until December 2021. The central bank has said that the pilot program is no guarantee that it will launch digital won.

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Yogita is a senior reporter at The Block and covers all things crypto. Before joining The Block, Yogita worked for CoinDesk and The Economic Times. She can be reached at [email protected] Follow her on Twitter @Yogita_Khatri5.