NongHyup Bank introduces blockchain system for CBDC

NongHyup Bank headquarters in Seoul / Yonhap

By Lee Min-hyung

NongHyup Bank started work on a blockchain system to deal with the introduction of a central bank digital currency (CBDC), the lender said Monday.

The bank plans to build the blockchain-powered platform, so it can play a proactive role after the Bank of Korea (BOK) introduces its own CBDC sometime in the near future. Under the platform, NongHyup will test whether it can help circulate the CBDC and enable transactions made with the digital currency.

For the establishment of the digital platform, the bank has teamed up with LG CNS. The bank is also scheduled to launch an electronic wallet service soon.

The pilot test will also be carried out on a broad scale by encompassing emerging blockchain-related areas such as non-fungible tokens and stablecoins, according to the bank.

"Establishing the system is one of our key strategies for digital transformation," NongHyup Bank Vice President Lee Sang-rae said. "We are going to keep expanding our digital finance infrastructure, so we can meet the demands of customers from all age groups."

The Korean central bank is speeding up its research drive into the CBDC. Since last August, the BOK has been doing technical research on the CBDC. The test will be conducted for 10 months until June this year. The central bank will test digital asset transactions and cross-border payments under its CBDC system.

As the CBDC is also set to be circulated by conventional financial firms such as banks, major commercial banks are in a rush to deal with the looming CBDC era.

Other commercial lenders such as KB Kookmin Bank, Shinhan and Woori have also built their own digital asset platforms, so they do not fall behind in the expected financial paradigm shift.

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