One of South Korea’s leading commercial banks is to pilot a new platform for a digital won, after working on the project in collaboration with LG subsidiary LG CNS.
Shinhan Bank is now hoping to collaborate with the country’s central bank with the blockchain-powered platform, in order to assist with the development and rollout of a central bank digital currency in South Korea.
The platform allows for the central bank to issue digital currency, while holding up commercial banks like Shinhan as intermediaries in the system. Emphasising the importance of the role banks would need to play as intermediaries, Shinhan said it would be necessary for the commercial banking sector to be involved.
“If the Bank of Korea issues a CBDC, an intermediary agency will be necessary for the smooth distribution and use of digital currency.”
The system would enable digital currency to be issued by the central bank, then used by individuals and affiliates for payments, foreign exchange and remittance, amongst other things. The platform also allows for funds to be segregated by type, allowing for a general pool of funds held by individuals, distinct from a pool for governmental funds, such as for emergency funding purposes.
The report published on their progress has yet to identify which blockchain was used in the development, though the central bank and other South Korean authorities are expected to take an interest in the project.
The project follows on from Shinhan’s previous work with digital currencies. In January 2021, the bank invested heavily in Korea Digital Asset Trust, a consortium of businesses providing crypto and digital asset custody.
The bank was also instrumental in the $7.5 million raise for startup Blocko, as well as backing stock lending projects powered by blockchain.