KakaoBank Completes Bank of Korea CBDC Pilot Test... "Playing a Central Role in CBDC Distribution Experiment"

Designed basic functions for distribution including cross-border remittance and currency policy features
Demonstrated digital financial technology capabilities and contributed to establishing the technical foundation for central bank digital currency

[Asia Economy Reporter Sim Nayoung] KakaoBank announced on the 15th that it has successfully completed the Bank of Korea's Central Bank Digital Currency (CBDC) pilot experiment research project.

Since August last year, KakaoBank participated in a 10-month research project conducted by the Bank of Korea to assess the technical feasibility of implementing CBDC. The research was carried out through collaboration among 12 organizations, including KakaoBank, centered around the Bank of Korea.

Leveraging its financial technology capabilities, KakaoBank played a pivotal role in the distribution experiment by participating not only in basic banking functions such as payment, collection, and remittance for private CBDC circulation but also in designing various external institutions necessary for small-amount distribution.

In the first phase of the pilot experiment, basic functions required for CBDC circulation such as wallet creation, exchange, remittance, and payment were implemented. The experiment tested wallet opening and closing needed for users to use CBDC, payment and collection functions for exchanging bank deposits into CBDC for deposit or withdrawal, and the ability to remit held CBDC to other users.

In the second phase, expanded functions such as cross-border remittance, law enforcement, monetary policy, and regulatory compliance were developed and tested. The cross-border remittance structure ensures contract fulfillment between intermediary institutions by utilizing smart contracts, allowing remittances to be completed even if each country’s distributed ledger environment differs.

Additionally, KakaoBank took a leading role in designing extensive CBDC policy-related functions including law enforcement, monetary policy, and anti-money laundering operations, completing the experiments. To this end, it also participated in designing virtual external institution systems such as domestic and international remittance intermediaries, overseas banks, and policy management institutions within the pilot experiment environment.

KakaoBank is currently actively participating in CBDC research by conducting the 'CBDC pilot system and financial institution linkage experiment' led by the Bank of Korea and participating as a linked financial institution.

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