South Korea's central bank, the Bank of Korea (BOK), has announced that it will launch a central bank digital currency (CBDC) pilot project next year in collaboration with major corporations and national banks.

According to Seoul Shinmun and the Fourth Journal, the BOK said it has completed the design and "technical checks" of the digital won and is currently in the "second phase" of its project, which includes a rigorous process analysis and "external consultation" with private sector companies.

The BOK said the token would be distributed "through financial institutions" such as banks "in the same way" as cash.

The BOK has not yet announced the exact timetable for its pilot project, but explained that it would create a collaborative public-private test environment for the digital won, with "private institutions" responsible for distributing the tokens, and a small number of companies willing to accept payments in the new currency.

No information has yet been released on the potential identity of the banks and private sector companies that will participate in the pilot project, but interested parties are sure to make their intentions known to BOK, particularly within the banking community.

A number of South Korean banks have already begun developing products and services that would be compatible with digital fiat, including wallets and advanced banking applications capable of processing digital fiat transactions.