Privately held financial institutions in South Korea are exploring the potential of tokenized deposit technology and seeking to provide a more secure and trustable alternative to centralized stablecoins and central bank digital currencies (CBDC).
As per Maeli Business, a regional media agency in Korea, Woori Bank and Hana Bank have expressed their keen interest in “certificate of deposit” tokens (CDs). It is important to note that both these banks have their headquarters in Seoul.
Certificates of deposit tokens are one of the most popular innovations in the finance industry, in which deposits of mainstream banks are converted into secure tokens on the blockchain, ensuring transparency and efficiency without disrupting the existing banking system.
CDs require identity verification similar to any conventional banking service to maintain security and comply with regulations. As per the updates, Hana Bank plans to research the tokens deeper.
Moreover, Woori Bank’s research department has already published a detailed report of 10 pages mentioning all points that have been confusing for the industry.
Most Banks are eyeing CDs as the substitutes for stablecoins because earlier this year, some disastrous events in the crypto industry stirred the centralized and decentralized banking system.
In a recent development, it is noted that the Bank of Korea conducted a proof-of-concept test for CBDC in which Hana and Woori Bank both participated to explore possible use cases and flaws of CBDCs.
Korea Might Opt for CBDC Soon
Available data shows that the Bank of Korea is working to introduce a central bank digital currency. The Bank is analysing all possible aspects, such as smart contracts, offline payments, and near-field communication, including cross-border payments.
Currently, more than 14 traditional Banks are conducting a pilot program to test the capabilities of CBDCs. Data shows that the pilot program impressively handles 2000 transactions per second but has some technical glitches as it reaches its limits.
Many countries worldwide are exploring CBDC based monetary systems, and some are even in the advanced testing stages. The United States needs to catch up and is still researching the technology.
Despite such diverse reactions from the crypto community, experts think the digital dollar could be the next big thing. At the same time, there is speculation that the regulatory actions by the authorities on the crypto industry were probably groundwork for the upcoming central bank digital currency.
Disclaimer
The views and opinions stated by the author, or any people named in this article, are for informational ideas only and do not establish financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
Source: https://www.thecoinrepublic.com/2023/07/26/bank-of-korea-considering-cds-while-exploring-cbdcs/