Bank of Korea Tested NFT Trading, Remittances With CBDC: Report

The central bank recently completed a 10-month-long experiment of a digital South Korean won.

AccessTimeIconNov 7, 2022 at 5:41 p.m. UTC
Updated Nov 7, 2022 at 9:21 p.m. UTC

Camomile Shumba is a CoinDesk regulatory reporter based in the UK. She previously worked as an intern for Business Insider and Bloomberg News. She does not currently hold value in any digital currencies or projects.

The Bank of Korea (BoK) has developed and tested a program that facilitates cross-border remittances by linking different central bank digital currencies (CBDC) from other countries, local media outlet Yonhap News reported on Monday.

The central bank had recently completed a 10-month experiment into a digital South Korean won, Governor Chang Yong Rhee revealed in a September speech.

During the project, the bank also tested the use of its CBDC to purchase non-fungible tokens (NFT), according to the report.

Major economies such as the U.S., U.K. and European Union have been exploring the issuance of CBDCs, while China has already carried out several trials. South Korea began its CBDC trial last year and completed the first of two phases by January.

In his speech, Rhee said that some decisions about a digital won required "trade-offs."

"We have realized that there is no such thing as perfect technology or CBDC designs that can satisfy all the various goals and expectations at the same time," Rhee said.

For instance, the bank made a decision to "improve compliance at the sacrifice of privacy," Rhee said.

BoK established a virtual money laundering and terrorism financing monitoring system and will facilitate data submission, Yonhap News reported.

The experiment found that a CBDC could process up to 2,000 transactions per second, Yonhap News reported. However, it also found that distributed ledger technology, which underlies crypto, does not yet have the scalability needed for a retail CBDC, Rhee said in his speech. So it may be better to use the standard centralized ledger database, he added.

In July, BoK announced it was working on "real world" tests of a CBDC with ten commercial banks.

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Camomile Shumba is a CoinDesk regulatory reporter based in the UK. She previously worked as an intern for Business Insider and Bloomberg News. She does not currently hold value in any digital currencies or projects.

CoinDesk - Unknown

Camomile Shumba is a CoinDesk regulatory reporter based in the UK. She previously worked as an intern for Business Insider and Bloomberg News. She does not currently hold value in any digital currencies or projects.