The Bank of Korea Introduces ISO20022 to BOK Financial Network Reflecting BIS Requirements

The Bank of Korea announced on the 18th that it plans to revamp its large-value payment system, BOK-Wire+, by the end of 2026, reflecting the common requirements of ISO 20022 (International Financial Messaging Standard) published by the Bank for International Settlements (BIS).

According to the Bank of Korea, the BIS Committee on Payments and Market Infrastructures (CPMI) released a report the previous day defining common requirements for the adoption of ISO 20022 as part of improving cross-border payment services.

ISO 20022 is an international standard for financial messaging approved and managed by the International Organization for Standardization (ISO). Financial messaging refers to electronic transaction information documents exchanged according to pre-agreed rules and formats to enable financial transactions such as fund transfers and securities trading between financial institutions.

The reason ISO established this international standard is to standardize the format and types of information in financial messages, which vary by country and payment system, to ensure international interoperability among payment services worldwide.

Currently, major countries' payment systems, including the Society for Worldwide Interbank Financial Telecommunication (SWIFT), have adopted ISO 20022. However, inefficiencies arise in cross-border message processing because countries adopt different ISO 20022 message formats or include different information items for the same fund transactions.

For example, confusion has occurred when returning funds sent in error because some countries use the funds return request message (pacs.004), while others use the general funds transfer message (pacs.009).

Going forward, if member countries adopt the BIS common requirements when implementing ISO 20022 in their domestic payment systems, such inefficiencies are expected to be reduced.

The Bank of Korea also plans to complete the adoption of ISO 20022 in BOK-Wire+ by the end of 2026 (tentative), reflecting the common requirements. The revamp of BOK-Wire+ and the participant institutions' IT systems will be pursued simultaneously.

The Bank of Korea explained, "We plan to announce the 'ISO 20022 Message Adoption Guidelines for Participant Institutions' in the first half of 2024 to enable participant institutions of BOK-Wire+ to use ISO 20022 messages."

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