South Korea: Top Banks Explore CBDC, Stablecoin Alternative

Lavina Daryanani
Source: WallpaperAccess

South Korean banks have been exploring alternatives for stablecoins and CBDCs. Certificate of Deposits or CDs have managed to garner the interest of top banks of the region. Citing unnamed “industry sources,” Maeli Business News Korea pointed out,

Hana Bank plans to conduct research on CD tokens as part of its internal decision to engage in the proof of concept (PoC) process for the CBDC project by the Bank of Korea.

Recently, the nation’s central bank tied up with Samsung to research CBDC for offline payments. The two sides signed a Memorandum of Understanding in Q2 2023. In fact, Samsung also participated in the two-part mock testing of CBDC conducted by the Bank of Korea last year.

Also Read: Bank of Korea Partners with Samsung to Research CBDC for Offline Payments

Are CDs more reliable than stablecoins?

The local media report underlined that Hana Bank is likely interested in exploring the central bank’s blockchain monetary variant. Several other banks also seem to be on board. For instance, Woori, one of the four largest domestic banks in South Korea, recently published a report revolving around deposit tokens and CBDCs.

In fact, from the bankers’ perspective, CD tokens are considered to be stable. This is because they do not differ significantly from the current system, a senior banker specified. Chalking out the need of the hour, Woori’s report added,

As interest in the wholesale CBDC and deposit token model is high, domestic financial companies need to conduct various domestic and overseas demonstration experiments using deposit tokens like global banks.

Here, it is worth noting that Woori Bank is also taking part in the PoC CBDC test conducted by the Bank of Korea. After the collapse of Terra’s native asset UST, algorithmic stablecoins were on the radar of regulators and investors started steering away from such assets. In fact, asset-backed stablecoins like Tether have also de-pegged a handful of times in the recent past, inviting skepticism from market observers. Thus, given the current state of affairs, CD tokens provide “more reliability” when compared to stablecoins, the report noted.

Also Read: Societe Generale Becomes 1st Company to Receive Crypto License in France