South Korea’s central bank is working on a blockchain platform for the issuance of government bonds. According to a local news report, this platform aims to test the real-time settlement of bond issuances.

To achieve this, the records at the Korea Securities Depository will utilize a distributed ledger. It enables the transfer of ownership to happen instantaneously at the same time as payments. The central bank, the Korean financial payments network (KFTC), and various other major financial institutions will host the nodes.

Could the Bank Issue a CBDC

Besides registering for the ownership of bonds, the payment part implies cash will be on the ledger as well. As a result, it could mean that the South Korean central bank could soon issue a central bank digital currency. It will most likely be a wholesale CBDC.

However, the central bank has previously said that it does not plan to issue a central bank digital currency. However, that might have been about a retail digital currency. In the past, the bank has researched how a central bank digital currency would affect the financial stability of the country.

This system seems quite enticing. It helps to reduce the risk of someone defaulting on payments. However, for frequent traders sometimes more cash is required at a single point in time. This is because the existing settlement systems net off amounts, which are due against the expected receipts.

In the announcement, the bank referred to the blockchain bond that was issued by the World Bank. A few months ago, the World Bank issued a $108 billion bond dubbed bond-i via the Commonwealth Bank of Australia. It was issued via a private version of the Ethereum Blockchain, which was tasked with creating, transferring, and managing the bond in its entire lifecycle.

The corporate bond market has attracted a lot of attention from the blockchain world. A company based in Japan called Nomura and Nomura recently launched the BOOSTRY that will allow for the tokenization of corporate bonds. Another major organization planning to test the technology is the Thailand Bond Market Association.

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