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The Governor of the South Korean Central Bank says Seoul is planning to use its Central Bank Digital Currency (CBDC)<\/a> to pay over 110 trillion won ($79.3 billion) in government subsidies.<\/p>\n The South Korean newspaper Hankook Ilbo reported that the Bank of Korea (BOK) chief Rhee Chang-yong said the payments would be made as part of a new \u201cdigital currency pilot project.\u201d<\/p>\n Rhee was speaking during a press conference held in central Seoul on August 28 following a Monetary Policy Committee meeting earlier in the day.<\/p>\n The move has come as something of a surprise in Seoul. The BOK announced in late June this year that it was putting CBDC testing on hold<\/a> in favor of developing stablecoin<\/a>-powered alternatives.<\/p>\n Rhee said the subsidy move was part of the greater Han River Project, the country\u2019s wider CBDC pilot.<\/p>\n The Bank of Korea\u2019s offices in Gwangju. (Source: Neoalpha)<\/p>\n The media outlet said that the new CBDC move was the brainchild of the Ministry of Strategy and Finance.<\/p>\n The ministry thinks that CBDC-powered subsidies will help prevent fraudulent use and improve fiscal policy efficiency. Rhee explained:<\/p>\n \u201cThis is part of the second Han River Project pilot. Using digital fiat to pay subsidies will let principal contractors better manage subsidies when entering into agreements with subcontractors.\u201d<\/p>\n The BOK and the ministry plan to issue contractors with CBDC tokens instead of bank transfers or vouchers.<\/p>\n The parties think that blockchain technology will help trace funds and ensure they are not being misused. Rhee added:<\/p>\n \u201cDuring his recent visit to the BOK, Koo Yun-cheol, the Deputy Prime Minister and Minister of Strategy and Finance, said he thinks this will increase the efficiency and transparency of subsidy payments.\u201d<\/p>\n The BOK was keen to point out that the new project would differ from the \u201cfirst\u201d pilot, which wrapped up in the first half of this year.<\/p>\n While the first pilot focused largely on commercial banks and their customers, the subsidy-focused pilot will be private sector-led.<\/p>\n Many of the banks that took part in the first pilot expressed their displeasure with CBDC launch plans.<\/p>\n They complained that they thought it unfair that they should shoulder the burden of making infrastructure investment costs.<\/p>\n But Rhee left the door open to the banking sector, suggesting the BOK is happy to partner with lenders who are still keen on CBDC business. The Governor said:<\/p>\n \u201cConsidering the scale of the project, at 110 trillion won, I believe this be attractive for banks. We plan to focus on working with banks with a strong willingness to invest .\u201d<\/p>\n<\/p><\/div>\n