Shinhan Bank, a South Korean commercial lender, developed a blockchain-based pilot platform with its partner LG CNS, the IT arm of conglomerate LG Corporation, for the launch of a central bank digital currency (CBDC).
According to the local news outlet Yonhap, the platform is already in its pilot stage and has created a virtual model of a CBDC issued by the Bank of Korea to test the platform. While the CBDCs will be issued by the central bank, financial institutions like Shinhan Bank will act as intermediaries in the system.
However, it is not clear if the commercial bank and its IT partner are leveraging any existing blockchain or developed the CBDC system on a proprietary infrastructure.
This development came when the South Korean central bank already launched a CBDC pilot program to test the technicalities and legalities of the digital won. However, the monetary regulatory clarified that it does not have any plans to launch the CBDC in the short term.
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The local report outlined that Shinhan Bank’s platform will allow individuals and affiliates to use the issued digital currencies for various real-world applications like payments, remittances and foreign exchange transactions.
Additionally, the CBDC system will divide the issued digital currencies into general funds, which will be held by individuals and government funds that will be kept as an emergency fund for specific uses.
Infrastructure Is Ready before CBDC
While central banks are still studying the launch prospects of digital currencies, private companies are preparing infrastructure to support them. Finance Magnates earlier reported on Ripple’s private ledger that will specifically support CBDCs.
Meanwhile, Shinhan Bank is an early adopter of blockchain and launched a Bitcoin-based remittance service as early as 2016. Furthermore, it is heavily invested in many cryptocurrency companies.