SK, Naver, Kakao compete for central bank's digital currency project

Tuesday 13 July 2021 14:39 CET | News

SK, Naver, and Kakao have engaged in a competition to become the partner of Bank of Korea (BOK) for a project to issue and circulate a central bank digital currency (CBDC) virtually to test whether it can be used successfully, according to The Korea Times.

According to the nation's central bank, SK, LINE Plus, and Ground X were the three bidders that submitted tenders for the project by the deadline. SK’s IT service provider is said to have joined hands with Viva Republica, which operates the Toss mobile money transfer app, and the Korea Financial Telecommunications & Clearings Institute, which provides the Zeropay mobile payment service. The bidder has engaged in the blockchain business with its own Chain Z platform, which is expected be used for the company to set up a system for the CBDC project. Its two partners are expected to advise it on financial services.

LINE Plus, a subsidiary of Naver, reportedly formed partnerships with Naver Financial, the IT firm's financial unit, and LG CNS, the IT service provider unit of LG Group. After unveiling the LINE Financial Blockchain platform optimised for the CBDC system, LINE Plus said it would aim at the global CBDC market. In addition, Naver Financial has an expertise in payment services, while LG CNS has experience establishing a CBDC platform with Shinhan Bank back in March 2021 on a trial basis.

Ground X, Kakao's blockchain subsidiary, has collaborated with ConsenSys, an ethereum software company, for the BOK's CBDC project.

According to industry sources, Samsung SDS decided eventually not to get involved in the BOK's CBDC project, although it had once considered its participation.

When the central bank held a meeting for the project last month, multiple IT firms and commercial banks expressed interest, but the BOK did not allow them to organize consortiums, saying the partners of bidders can only take part in the project as subcontractors. As a result, the number of bidders became much fewer than expected.

The BOK plans to select the preferred bidder within July 2021, after reviewing their technologies and price quotations. The project will start in August 2021. The winning bidder will run a pilot programme for 10 months budgeted for up to USD 4.3 million.

A four-month trial will run through December 2021 on a cloud platform to verify the technical feasibility of CBDC issuance, distribution, and recovery. The second phase of the trial will explore the possibility of expanding CBDC use and widening the implementation of technology to strengthen personal information protection to be completed by June 2022.

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Keywords: CBDC, blockchain, central bank
Categories: Blockchain & Cryptocurrencies | Cryptocurrencies
Countries: Korea, Republic of
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Blockchain & Cryptocurrencies