According to a report released Monday, The Bank of Korea completed the first phase of a central bank digital currency (CBDC) simulation project in December 2021. The second phase of the CBDC mock testing is expected to complete by June this year.

The report said that the first phase of the mock test involved some of the basic functions of a CBDC, including manufacturing, issuing and distribution in a simulation environment. It concluded that the CBDC "works normally" under test conditions.

The second phase of the central bank digital currency (CBDC) pilot would test the technology needed for its actual usage and real-world functionalities, such as cross-border remittance, retail payments, and offline payments, to the test.

Following the completion of the second phase in June, the BOK plans to start discussions on its actual launch and commercialization. Throughout that time, it intends to broaden the scope of the tests by collaborating with financial institutions.

"We will confirm the possibility of operating various functions, such as offline settlements, and the application of new technologies, such as one intended to strengthen privacy protection during the second phase of the test." The bank stated.

The Bank of Korea isn't the only central bank looking into CBDCs. Over the last year, China has been conducting trials for its digital currency e-CNY, while Nigeria's central bank debuted the e-Naira in October 2021. And Other major economies, including the United States, the European Union, and Japan, are conducting mock testing of their digital currencies.