Global central banks are increasingly looking at blockchain technology as a tool to make interbanking processes more efficient and transparent. Following the World Bank’s exemplary experience of blockchain bond transactions, South Korea’s central bank is working on its own blockchain-based bonds. The report comes first in the press on Feb 18.

Bank of Korea started the project in late 2019

According to the report by local publication Yonhap Infomax, the Bank of Korea has been seeking a blockchain services provider to build a blockchain bond system. It should allow the distribution of the bond records among all participants.

The Bank of Korea reportedly launched a Proof of Concept (PoC) project in late 2019 in order to move bond transaction records that are currently maintained by the Kora Securities Depository to a blockchain-powered base of records accessible by multiple nodes.

South Korea’s Central Bank to evaluate blockchain’s capabilities in speeding up transactions

The blockchain bond project would involve separate nodes operated by South Korea’s regulatory authority, the Korea Fair Trade Commission, the Bank of Korea and other financial institutions, the report notes.

A local official reportedly confirmed that South Korea‘s financial authorities have been testing the potential of blockchain in terms of issuing state bonds to record transactions:

We are using government bonds to record securities and cash transactions in a distributed ledger and test whether a real-time simultaneous payments trading system is possible.

According to Yonhap Infomax, the Bank of Korea’s blockchain research regarding the bond market is being conducted with reference to the purported first-ever blockchain bond transaction handled by the World Bank and the Commonwealth Bank of Australia back in 2018.

As per the earlier report, the World Bank raised a total of $74 million for its two-year blockchain bond as of August 2019. According to the bank, the bond is the first to be created, allocated, transferred, and managed throughout its life cycle using distributed ledger technology.

Regarding the Bank of Korea, South Korea’s central bank announced in late 2019 that it will be setting up a dedicated group to research central bank digital currency in 2020.