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S Korea Claims Cross-border CBDC Success, Chinese Bank Chief Says e-CNY Will Boost Trade

Tim Alper
Last updated: | 2 min read
Source: Oleksii/Adobe

East Asia could become the central bank digital currency world’s center of gravity – with major cross-border functionality advances on the cards in China and South Korea.

In South Korea, the central Bank of Korea (BOK) has claimed that its “second phase” of pilots has now been “successfully completed.” The bank claimed that it has tested the prototype digital KRW’s functionality for cross-border transactions.

Per Yonhap, the BOK has tested its digital won’s ablity to make international remittances – and was satisfied with the results. It also suggested that it had tested the digital KRW’s ability to link with the world of crypto – and has used the coin to buy non-fungible tokens (NFTs).

Interoperability with other nations’ pilot CBDC projects was also tested. This appears to have involved cooperation with South Korea’s closest political ally, the United States. The media outlet noted:

“With the assumption that South Korea and the United States would issue CBDCs that make use of different [blockchain networks], remittance transactions between countries were processed [using] intermediary companies.”

Offline functionality was also tested.

The BOK stated that it would now proceed with the next stage of its pilot, which will focus on the digital won’s function in the micropayments space.

Digital Yuan Adoption ‘Will Drive Trade’

Both the BOK and the Bank of Japan are thought to have stepped up the pace of their CBDC projects in direct response to China’s progress with its digital yuan.

The digital yuan is also still officially in the pilot stage, but has effectively rolled out in the nation’s most prosperous cities, where it is already being used in the payments, e-commerce, and remittance spaces.

And now, a major figure in the banking world has opined that the coin will break new ground in the trade world.

China Securities Journal reported that the claims were made by Liu Jun, the Vice Chairman and President of Bank of Communications, at the Hongqiao International Economic Forum.

Liu Jun explained that the CBC would help boost the yuan’s role in the international monetary system, and mentioned the notion of “enriching the cross-border applications” the of digital yuan.

The Chinese central bank has insisted on multiple occasions that the digital CNY is primarily a domestic project and is not intended as a dollar replacement. But observers claim that Beijing actually hopes to use the coin in a wide range of cross-border scenarios.

Liu Jun also claimed that “compared with other sovereign digital currencies,” the digital yuan had “numerous advantages.” Namely, he said, these were a “relatively mature technological base,” a “wide pilot” with “multiple usage scenarios,” as well as “high levels of compatibility and security.”