The South Korean commercial bank, Shinhan Bank, has collaborated with the Bank of Korea (BOK) to launch a Central Bank Digital Currency (CBDC) project. A South Korean news agency unveiled this news on March 8 noting that LG CNS, a subsidiary of LG Corporation has assisted Shinhan Bank to build a blockchain-based pilot platform for the digital won.
According to a Shinhan Bank official, the intermediary banks would be a crucial part of the ecosystem. The official stated,
If the Bank of Korea issues a CBDC, an intermediary agency will be necessary for the smooth distribution and use of digital currency.
In a move that will likely boost commercial services in the country, Shinhan Bank’s CBDC system allows anyone with the currency to use it for local payments, remittances, and foreign exchange transactions.
The central bank plans to channel some of this national digital currency into government funds that can be used as an emergency funding and also be released to the public.
It is still unclear which blockchain network was used in the development of the digital currency. Neither of the partners could be reached for comment on this issue.
Shinhan Bank follows its January equity investment in Korea Digital Asset Trust, a digital-asset custody provider.
The bank also invested $7.5 million in funding for Blocko and provided support to blockchain-backed stock lending businesses.
Reportedly, the Bank of Korea rolled out digital won trials in April 2020. It also released a report that admitted it still had to streamline legal issues around digital currency.