The Bank of Korea is advancing the second round of CBDC testing, intending to use Digital Money for precise management of government subsidies.

[Chain News] The Central Bank of South Korea is preparing for the second round of Digital Money testing and has sent official documents to participating banks. It is understood that the key innovation in this round is what? The Central Bank intends to distribute part of the government subsidies in the form of CBDC, using the characteristics of Digital Money to precisely control the use of subsidies while significantly dropping administrative costs.

Sounds good, but the journey for the Central Bank of Korea to get to this point has been quite tortuous. The first pilot project launched last April involved seven banks and was originally planned to run for three months, but it was later suspended—why? The actual application value was limited, and the participating banks faced cost pressures of billions of Korean Won, leading many institutions to express their concerns.

This time, the Central Bank has learned its lesson. The specific testing methods, timetable, and how to balance costs and benefits are currently being discussed in detail with the banks. The implementation of CBDC in the field of policy subsidies may become another practical scenario following payment and settlement.