South Korea’s Ministry of Economy and Finance has taken an important step towards digitalization in the management of public expenditures. According to local media reports, the ministry will launch a trial using blockchain-based collateral tokens in the management of public funds in the last quarter. This initiative aims to increase transparency and efficiency in the use of public resources across the country.
A new era in public payments with digital money
This approved pilot application allows the state to make promotional and business development expenses with digital currency. Currently, only purchasing cards can be used for government spending, and this practice has long been carried out under the Treasury Funds Management Act. However, with the new regulation, within a limited framework, relevant public institutions will have the opportunity to go beyond this traditional method and test digital payments.
It was announced that this change for development purposes will be carried out by the ministry within the scope of a regulatory trial program extending until 2026. Thus, the aim is to quickly evaluate new payment methods and make them more effective.
Monitoring and transparency in public expenditures will increase
Authorities state that control over the use of public funds will be strengthened thanks to digital and programmable tokens.
Authorities stated that predetermined conditions can be applied in token-based payments, for example, control over spending can be increased with options such as which sectors will accept these payments or in what time periods the money can be spent.
Additionally, the need for manual inspection will decrease; The process can be monitored automatically, especially for expenses made outside working hours.
By removing intermediaries such as traditional card networks, transaction costs for small businesses receiving government payments are also expected to decrease.
It has also been tried before for electric vehicle support
This step will enable collateral tokens to be used for the second time in treasury operations. A similar pilot application was previously implemented in government incentives for electric vehicle charging infrastructure.
The new trial will be held in the city of Sejong, and the companies that will participate in the pilot will be determined through a special selection process. The Ministry plans to expand this program if control over expenditures is strengthened and a measurable reduction in costs is achieved.
