The Bank of Korea Builds Next-Generation BOK Financial Network... Targeting Operation in October

[Image source=Yonhap News]

[Asia Economy Reporter Kim Eun-byeol] The Bank of Korea plans to improve the large-value payment system, the BOK Financial Network, aiming for operation in October.

On the 14th, the Bank of Korea announced that following improvements to the small-value payment system participation scheme in June, it is now promoting the restructuring of the BOK Financial Network, a large-value payment system directly operated by the Bank. The BOK Financial Network is the only large-value payment system in South Korea. It enables real-time fund transfers between financial institutions through current deposit accounts and payment-only deposit accounts opened at the Bank of Korea.

Through this restructuring, the Bank plans to abolish the existing bilateral simultaneous processing, which had increased system load among liquidity-saving payment methods (bilateral and multilateral simultaneous processing), and shorten the execution cycle of multilateral simultaneous processing from 30 minutes to 5 minutes, thereby enhancing system stability and payment efficiency. Multilateral simultaneous processing refers to collecting payment transactions from participating institutions at set times, offsetting the amounts to be exchanged, and simultaneously settling transactions that can be processed within the current deposit balance.

Payment accounts will also be reorganized. The payment-only deposit accounts will be abolished, and separate payment-only current deposit accounts will be newly established. The 'intraday current account loan' system, where the Bank of Korea automatically provides liquidity support when a participant institution lacks payment funds, will be implemented. Additionally, a system enabling direct fund transfers between transaction parties, instead of routing through the Korea Securities Depository account during over-the-counter bond transactions, will be introduced.

The Bank of Korea plans to expand the payment information system based on a large-capacity data storage platform to ensure smooth operation of the BOK Financial Network and stable management of payment risks. The openness of the BOK Financial Network will also be expanded. If participation in the small-value payment system by fintech companies and others is permitted in the future, the Bank will revise the related systems for opening current deposit accounts and joining the BOK Financial Network.

Since 2015, the Bank of Korea has been working on the next-generation BOK Financial Network construction project, and the system development is now complete. Testing is underway with the goal of operation in October.

This content was produced with the assistance of AI translation services.