CBDC (Central Bank Digital Currency) is the main character.

It's a digital currency issued by the central bank of the country. The Bank of Korea, which is responsible for our country's monetary policy, has also been working hard on this coin.

After several investment fads and flurries, which saw the emergence of virtual assets that are now viewed as investment products, governments and central banks have begun experimenting with applying these digital currencies to our daily lives. I'm thinking of making a coin guaranteed by the government.

This is CBDC (Central Bank Digital Currency), the main character in today's report. It's a digital currency issued by the central bank of the country. The Bank of Korea, which is responsible for our country's monetary policy, has also been working hard on this coin. And finally, the CBDC use test began on the 1st of this month for the general public.

The media and the financial community are paying close attention to the experiment, which will run until June 30 under the name Project Han River. It is a large-scale experiment in which 100,000 people will participate, and the era of digital currency may open soon depending on the test results.

What is CBDC? It's the national official currency (legal currency) like Korean won or U.S. dollar, but it is a digital currency that does not print paper money or coins. The issuance of CBDC means that the Bank of Korea creates virtual assets like bitcoin in Korea and the Federal Reserve System (Fed) in the United States.

CBDC is similar to existing virtual assets in that advanced technologies such as blockchain are applied, but the value is set, so market price fluctuations do not occur like Bitcoin. Since the government guarantees it, even digital currency is no different from actual paper money. In fact, there are fewer and fewer cases of using paper money and coins. So instead of printing less real money, CBDC can complement its role, and in the distant future, only CBDC can be used.

Even if CBDC is introduced in earnest, the lives of ordinary consumers will not suddenly change significantly. Credit cards are already more widely used than cash, and mobile payment services such as 'OO Pay' have become more common.

However, there is a big difference at the national level. This is because it can reduce the cost of the money exchange transaction itself. It may vary slightly depending on how each country develops CBDC, but it is advantageous to reduce costs and maintain security because it basically uses technologies such as blockchain. It operates safely without multiple institutions or complex paperwork for payment processing. The fee is also expected to be much cheaper.

For example, there is no need to go through various financial institutions when the government pays subsidies to the people or when the people pay taxes to the government. It's safe to just send it from our electronic wallet with CBDC to the government wallet. This makes it much easier for central banks to use policies to control the amount of money in the market, and it also makes it easier to crack down on tax evasion or illegal transactions. In most transactions where money comes and goes, efficiency is greatly improved. Of course, you can also save a lot of money printing and managing real money.

If CBDCs are used very actively, it could take away a lot of the role of banks in the extreme. However, in the case of CBDC tested by the Bank of Korea this time, it is a "CBDC for institutions" used only by financial institutions without reducing the role of banks.

As explained earlier, if the CBDC that everyone uses on a daily basis is 'universal', the test this time is 'institutional'. It means that the Bank of Korea and domestic banks exchange necessary funds with each other in the institutional payment network, and apply CBDC only here.

Of course, individuals can also enjoy the benefits of CBDC indirectly. You don't have a CBDC directly, but you can use a 'deposit token' linked to an institutional CBDC. A deposit token is a digital currency issued by commercial banks with CBDC as collateral. CBDC itself is used only by financial institutions and does not release it to consumers, but banks reissue tokens secured by CBDC so that consumers can use them indirectly. Deposit tokens are made to be used like regular bank deposits. It is said that remittances and deposits were made as easy as possible to use by consumers by making them like existing deposits.

Seven domestic banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup, IBK Company, and BNK Busan) will participate in this experiment. Citizens over the age of 19 who have an occasional deposit account in each bank can apply to participate through the bank's mobile app. Up to 100,000 people will participate in the test when all the people assigned to each bank are combined.

From the 1st of this month, participants can convert deposits in their accounts into deposit tokens up to 1 million won at a time and store them in their electronic wallets, and use them at more than 20,000 places such as convenience stores, cafes, bookstores, marts, and