Hana Bank and Woori Bank are both exploring certificates of deposit tokens. Hana Bank plans to conduct research on the tokens, while Woori Bank’s research department has already released a report about them.
Multiple private banks in South Korea are investigating tokenized deposit technology as an alternative to private stablecoins and CBDCs.
CD Tokens: Interest Among South Korean Banks
Hana Bank and Woori Bank, both headquartered in Seoul, express interest in “certificate of deposit” tokens (CDs). These tokens represent tokenized bank deposits on the blockchain without disrupting the existing banking system.
CDs require identity verification similar to traditional bank services. The appeal for banks lies in their stability and similarity to the current system, a response to the anxiety raised by stablecoin failures in 2022, as stated by anonymous senior bankers cited in the report from Maeli Business News Korea.
CDs’ Compatibility with CBDCs: South Korean Banks’ Participation
Hana Bank and Woori Bank, involved in the proof-of-concept test for a CBDC by the Bank of Korea, also find CDs promising due to their potential compatibility with CBDCs.
The Bank of Korea is actively preparing for the possible introduction of a CBDC, exploring smart contracts, near-field communications for offline payments, and cross-border payment solutions.
A pilot program with 14 private banks is underway, but technical challenges need addressing, as the system experienced slowdowns under high transaction volumes.
The Bank of Korea is currently working on improving the project’s technical capacities.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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