The South Korean Central Bank has launched the second round of CBDC testing, considering the distribution of government subsidies using digital money.

The Bank of Korea recently issued a formal notice for the second round of CBDC testing to major banks. Central Bank officials revealed that specific implementation details and timelines are still under further discussion.

This round of testing has an interesting angle - the Central Bank intends to distribute a portion of government subsidies in the form of digital currency. What are the benefits of doing this? First, it allows for precise control over the usage scenarios of the subsidies, and second, it can significantly reduce the management and administrative costs in the process of distributing the subsidies.

In fact, the Central Bank of Korea had already promoted a CBDC pilot project in April of this year, with seven banks participating, which lasted for three months. However, that pilot was later suspended. The reasons for this are quite realistic, as the actual application value of the project was deemed limited, and it placed a cost pressure of billions of Korean won on the participating banks, attracting considerable criticism.

Whether this second round of testing can better demonstrate the practicality of Central Bank Digital Currency depends on the subsequent implementation effects.