Kakao mentors Bank of Korea on AI, blockchain
The Bank of Korea headquarters in Seoul and Kakao Friends character Ryan. / Korea Times files
By Park Jae-hyuk
Kakao is serving as the most important adviser to the Bank of Korea (BOK) for its digital innovation, which was selected as one of the central bank's four long-term development strategies on its 70th anniversary.
The BOK said Thursday it recently had talks on blockchain technologies with Ground X, Kakao's blockchain subsidiary that operates the Klatyn platform.
The bank is preparing for the virtual issuance and circulation of a central bank digital currency (CBDC) in 2021 to test whether it can be successfully used. It plans to take charge of CBDC's issuance while tasking the private sector with its circulation.
“Ground X was among domestic blockchain companies that met with us for the CBDC project,” an official of the BOK's digital currency research team said.
Although the BOK is yet to decide which company to join with for the project, the Kakao subsidiary has been mentioned as the strongest candidate among global messenger operators vying to dominate the blockchain industry.
Facebook, which introduced its virtual asset Libra, has apparently failed to win the hearts of central banks worldwide on concerns of destabilization of the financial system. The U.S. tech firm has already lost its major partners including Visa, MasterCard, eBay and Vodafone.
Another contender is Naver's Japanese subsidiary LINE, which has had talks with central banks in major Asian countries through its blockchain subsidiary Unchain.
LINE tendered for the BOK's CBDC pilot system development project, after organizing a consortium with EY Hanyoung and Samsung SDS. However, the bidding was voided this week because there was no other bidder except the consortium.
Even if Kakao does not take part in the bid, industry insiders expect the BOK will continue talks with the company, considering the number of its messenger app users and its ability as a mobile payment service provider.
Kakao has already served as the central bank's first private-sector partner for digitization.
In June, the BOK signed a memorandum of understanding with Kakao Enterprise for cooperation in artificial intelligence (AI) technologies.
Kakao Enterprise said it would enable machine-translation documents, speech-to-text system-based recording of the proceedings of meetings and AI-based curation for the central bank. The company also plans to develop technologies that can be used for financial policymaking over the long term.
In July, the BOK launched the digital innovation department for better collaboration with the Kakao subsidiary. The department is in charge of studies on digital technologies, data governance strategies and the establishment of digital infrastructure such as BReiT and Data Lake.