Samsung and Bank of Korea Partner for In-Depth Offline CBDC Payments Research
Samsung Electronics and the Bank of Korea have inked a partnership to research Central Bank Digital Currency (CBDC) technology that could facilitate offline transactions.
On Monday, the two companies signed a memorandum of understanding at Samsung’s headquarters in the south of Seoul, according to a report by The Korea Herald.
The collaboration aims to eliminate the reliance on the internet and introduce a new phase of smooth offline transactions.
Furthermore, the two parties will conduct collaborative research with the objective of promoting the formation of a CBDC system and increasing the functionality of virtual money.
Samsung Electronics participated in the Bank of Korea's two-part mock testing of CBDC last year.
The electronics giant helped develop an offline CBDC technology that makes transactions and payments between mobile devices via near-field communication without an online connection using Samsung’s security chip, the embedded Secure Element.
Going forward, the two companies will work on enabling users to access transactions and payments through Samsung’s Galaxy smartphones and Galaxy Watch, even in situations when online networks cannot be accessed.
“It is meaningful that (the BOK) was the first to come up with the offline CBDC technology with Samsung Electronics," Bank of Korea Deputy Governor Lee Seung-heon reportedly said.
"We hope that Korea can take the lead in offline CBDC technology through this memorandum, as central banks across the world are actively working on it.”
Choi Won-joon, executive vice president and head of the mobile research and development office at Samsung’s Mobile eXperience division, said the collaboration could propel "the growth of global offline CBDC technology."
CBDC Adoption Grows but Concerns Remain
The adoption of CBDCs is accelerating around the world, as more countries and central banks begin to explore and test their own digital currencies.
The People's Bank of China is currently leading the pack. The country has launched numerous test pilots of its CBDC across various provinces, with over 200 million people already taking part in trials.
Most recently, the coastal province of Jiangsu promised to launch a platform that will allow citizens to pay education fees using the country's CBDC.
Other central banks, including the European Central Bank and the Bank of Japan, are also exploring the potential of CBDCs.
However, there are still some concerns about these digital currencies.
One of the main concerns is privacy and security. CBDCs rely on complex and sophisticated technology, and there are concerns that they could be vulnerable to hacking and other cyber risks.
Privacy is also a concern, as CBDCs could potentially provide central banks with unprecedented levels of access to individuals' financial data.
In fact, for these reasons, Florida has recently banned the use of CBDCs as money within the state.