Bank of Korea (BOK) looking to develop a new blockchain system for the Korean Bond Market
Financial news outlet Yonhap Infomax confirmed on Tuesday that the Korean Central Bank was looking for a firm to assist in building a new blockchain system which would improve record-keeping on the market.
Bond transactions could be recorded on the blockchain and as such could form the basis for a "real-time simultaneous payment trading system", an official told Yonhap. This system would be designed to be shared between relevant financial institutions, as well as the BOK and FTC (Fair Trade Commission), which is Korea's financial overseer.
The BOK is unlikely however to launch a blockchain bond system until is has much better regulatory clarity in terms of knowing who would be ultimately responsible for any issues or hiccups.
The bond market of Korea is one of the largest markets in Asia. The government regularly issues debts, which can be and are purchased by foreign investors.
The country, as such, has rapidly become a regional leader with the advent of responsible bonds like green bonds, which saw issuances rise to more than $6 billion in June 2019, which is even $2 billion ahead of Korea's biggest neighbour - China.
The BOK is said to have been inspired by the World Bank, which itself has raised a total of $108 million through two bond sales which were held on a private version of the Ethereum blockchain, together with the Commonwealth Bank of Australia.
It is not certain whether this blockchain initiative would only be integrated with debt issued by the government, or whether it could be expanded to include corporate debt, too.
In a similar vein, it is unclear if the bond platform could be made to support a CBDC.
The BOK did, however, establish a task force dedicated to researching CBDCs at the end of 2019.