South Korea’s Central Bank Set To Use Blockchain Technology For Bond Transactions
Bank of South Korea, the country’s central bank, has become the latest central bank to explore blockchain technology to enhance efficiency as well as transparency in interbanking processes.
South Korea’s central bank is now seeking to emulate the World Bank which successfully introduced the use of blockchain technology in bond transactions. According to Cointelegraph the Bank of Korea is developing blockchain-based bonds.
A report which first appeared on a local news outlet Yonhap Informax, reveals that the South Korea’s central bank has been looking for a blockchain services offeror who will help in development of a blockchain-based bond system which will enable the swift distribution of all the bond details to all the participants.
Late last year, the Bank of Korea rolled on a project about Proof of Concept (PoC) with an aim of transferring bond transaction information to a blockchain-based records system that can be accessed by numerous nodes. At the moment these records are stored by the Korea Securities Depository.
The project will bring together various state agencies such as the country’s regulatory authority, the Bank of Korea, Korea Fair Trade Commission as well as financial institutions. The project will have different nodes that will be operated by these institutions.
According to an official privy to the project’s details, various Korea’s financial authorities have actively been piloting the benefits of blockchain technology when it comes to issuance of state bonds. He explained:
“We are using government bonds to record securities and cash transactions in a distributed ledger and test whether a real-time simultaneous payment trading system is possible.”
As per the report by Cointelegraph, the current blockchain research by Bank of Korea in relation to the bond market transactions is being guided by blockchain-based bond transaction between Australian Commonwealth and the World Bank which took place in 2018.
Late last year, the Bank of Korea revealed that it was in the process of coming up with a competent group that will research and give recommendations on the launching and use of a central bank digital currency (CBDC), an exercise that will be conducted this year.