Major South Korean commercial bank Shinhan Bank is looking to collaborate with the country’s central bank on developing a national digital currency.
Shinhan Bank has developed a blockchain-based pilot platform for a central bank digital currency, or CBDC, in partnership with LG Corporation’s IT services arm LG CNS, South Korean news agency Yonhap reports Monday.
Shinhan Bank and LG CNS created a virtual CBDC model where the Bank of Korea issues a CBDC, while other banking institutions like Shinhan Bank act as financial intermediaries. The bank emphasized that CBDC intermediaries would be an integral part of a digital won ecosystem, stating, “If the Bank of Korea issues a CBDC, an intermediary agency will be necessary for the smooth distribution and use of digital currency.”
According to the report, Shinhan Bank’s CBDC system allows individuals and affiliates to use the issued CBDC for payments, remittances and foreign exchange transactions. The platform also divides the CBDC issuance into general funds held by individuals and government funds intended for specific purposes like emergency funding.
The report does not specify what blockchain network was used. Shinhan Bank and LG CNS did not immediately respond to Cointelegraph’s request for comment.
As previously reported, Shinhan Bank deepening its involvement in the crypto and blockchain industry. In January 2021, Shinhan Bank invested in Korea Digital Asset Trust, an industry consortium of businesses that provide digital-asset custody. The bank also participated in a $7.5 million funding round for Blocko and supported blockchain-based projects for stock lending.
Meanwhile, the Bank of Korea has been progressing apace with its CBDC. After starting digital won trials in April 2020, the South Korean central bank issued a lengthy report in February, in which it stated that crucial legal issues with digital currencies must be addressed in order to move forward.