Bank of Korea Conducts Successful CBDC Pilot Test with Financial Institutions
The Bank of Korea (BOK) announced yesterday in a press release that its central bank digital currency (CBDC) pilot program operated successfully in a practical setting involving multiple financial institutions.
Testing environments
Previously, the CBDC system was tested in an isolated cloud environment. In this recent test, the system was installed on the servers of various financial institutions over a five-month period to evaluate its performance.
The 1.2 billion KRW ($905,000) project included the participation of six companies, such as Kakao’s Krust Universe, KakaoBank, and KakaoPay, as well as 14 banks and the Korea Financial Telecommunications and Clearings Institute. Kookmin, Shinhan, and Woori were among the participating banks.
Four scenarios
The BOK and financial institutions tested the system’s performance under four scenarios: increasing transaction requests per second, increasing the number of active users, reducing the transaction queue size, and adjusting the block generation time ratio.
The increase in transaction requests led to a 10% decrease in transactions per second (TPS), from 2,100 TPS to 1,900 TPS, compared to the single cloud environment test. This result is still deemed acceptable, as the highest TPS recorded in the current small payment infrastructure network is 1,200, which occurs on paydays and other high-transaction days.
Issues such as slower response times arose with higher transaction request volumes but were resolved by enlarging the transaction queue size and increasing the block formation time proportion in the block generation process. The block generation process involves two stages: block formation, where transactions are recorded, and block validation, where transactions are verified.
Greater stability
The test demonstrated that transaction errors at individual institutions did not affect others, suggesting that a distributed ledger system offers greater management stability than a centralized system. However, institutional officers cited challenges in problem-solving and communication when using the distributed ledger system.
The BOK plans to involve more institutions in ongoing experiments this year, supporting them in testing their smart contracts on the CBDC pilot system.
