Global central banks are increasingly looking at blockchain technology as a tool to make interbank processes more efficient and transparent.
Following the exemplary experience of the World Bank with blockchain bond transactions, the central bank of South Korea is working on its own blockchain-based bonds.
According to a report from the local publication Yonhap Infomax, the Bank of Korea has been looking for a blockchain service provider to build a blockchain bond system that would allow distribution of the bond records to all participants.
Allegedly, the Bank of Korea launched a Proof of Concept (PoC) project at the end of 2019 to move records of bond transactions currently managed by the Korea Securities Depository to a blockchain-powered database of records accessible through multiple nodes.
The blockchain bond project would include separate nodes managed by the South Korea regulatory authority, the Korea Fair Trade Commission, the Bank of Korea and other financial institutions, the report reports.
A local officer has reportedly confirmed that South Korea’s financial authorities have tested the potential of blockchain in the area of government bond issuance to record transactions:
“We use government bonds to record securities and cash transactions in a distributed ledger and to test whether a real-time trading system for simultaneous payments is possible.”
According to Yonhap Infomax, the Bankchain’s blockchain investigation of the bond market is being conducted with reference to the alleged very first blockchain bond transaction that was settled by the World Bank and the Commonwealth Bank of Australia in 2018.
In August 2019, the World Bank raised a total of $ 74 million for its two-year blockchain bond. According to the bank, the bond is the first to be created, assigned, transferred and managed throughout the entire life cycle using distributed ledger technology.
As far as the Bank of Korea is concerned, South Korea’s central bank announced at the end of 2019 that it would set up a special group in 2020 to investigate the digital currency of the central bank.