Samsung Electronics has decided to participate in a project being pursued by the Bank of Korea (BOK) to build a pilot platform for a central bank digital currency (CBDC).
The BOK is scheduled to activate the CBDC pilot program July 28, and it will be co-managed with Ground X, a blockchain affiliate of messenger-platform giant, Kakao.
“Samsung Electronics has recently decided to participate in the BOK-led CBDC pilot project, under which interested parties will research the practicalities of the CBDC in a test environment,” an executive familiar with the issue said Wednesday.
BOK and Samsung officials said the project was based on the benefits of a CBDC that include more efficient and advanced payments systems and financial inclusion. Samsung is hoping to test the possible usability of blockchain-based systems on its Galaxy mobile lineup.
“Specifically, the Kakao consortium and Samsung Group’s two tech affiliates will launch a pilot program aimed at checking on money transfers and remittances between countries, issuing and distributing the CBDC and monitoring how that eventually works in virtual environments,” the executive said.
Because the BOK’s efforts are aimed at preparing for adjustments in the payment settlement system, Samsung Electronics plans to test the functionality of the digital currency inside its Galaxy smartphone. “Will it be possible to conduct payments via mobile phones using the digital currency with no internet availability, or to send remittances of the CBDC to other mobile phones or to other connected bank accounts, are the two core points that Samsung is looking at,” said an official.
Samsung SDS, the group’s IT unit, will play some role for the program. Its affiliate, Escor, will handle the procedures for the experiments with the CBDC. Central banks in developed countries have been showing keen interest in the development of a CBDC, with China’s digital yuan (E-CNY) being the closest to showing visible results.
BOK Governor Lee Ju-yeol downplayed the significance of crypto-assets, as all types of cryptocurrencies aren’t positioned to be valued properly, due to their essential, volatile nature.
But despite his negative stance toward them, he has opened up to the possibility of studying a CBDC and to contemplating why it matters in terms of modernizing financial systems. Because “stablecoins” have become more popular, some observers believe that central banks need to provide alternatives. The BOK will operate its simulation programs regarding the efficacy of the CBDC in two stages.
The BOK plans to use Klaytn, Ground X’s blockchain platform, as the main platform for its CBDC structure.