Blockchain for Banking News

LG CNS to develop CBDC system for Korean tokenized deposits

digital won cbdc currency

Today the Bank of Korea (BOK) announced the award of a contract to LG CNS to develop a wholesale central bank digital currency (wholesale CBDC) system for trials. It follows the October unveiling of plans for two wholesale CBDC trials. One involves banks issuing tokenized deposits and using a wholesale CBDC for interbank settlement. The other will use wholesale CBDC for securities settlement using DLT platforms.

While the tokenized deposit trial will involve 100,000 people and start in September or October 2024, the LG CNS contract will run to March 2025 with a budget of KRW 9.68 billion ($7.45m). The central bank said it had already run usability tests.

In 2020, LG CNS partnered with Shinhan Bank to develop and pilot a blockchain-based digital currency platform aimed at preparing for a retail CBDC. At that time, BOK was planning retail CBDC trials, and the two organizations hoped to participate. 

Having completed two phases of retail CBDC trials, the central bank doesn’t see the need for a retail CBDC at present.

On the other hand, it does see potential for programmable payments. Using the Singapore concept of purpose bound money, the central bank envisions banks offering purpose bound money backed by customer deposits.

Meanwhile, in May the central bank announced a collaboration with Samsung to explore offline CBDC.

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