The Bank of Korea "Promotes Payment and Settlement Improvements with Major Countries Including the US and Japan"

Bank of Korea BIS, IIF Collaborate on Cross-Border Payment Improvement Project
Aiming to Build Prototype Before CBDC Real Transaction Implementation

[Image source=Yonhap News]

The Bank of Korea, the Bank for International Settlements (BIS), and the Institute of International Finance (IIF) are jointly advancing the Agora Project to improve cross-border payment systems.

On the 3rd, the Bank of Korea announced that it will jointly promote the Agora Project with BIS and IIF, aiming to implement a prototype stage before actual transactions for institutional central bank digital currencies (CBDCs).

The IIF represents central banks and private financial institutions from seven countries, including five major reserve currency countries: Korea, the United States, Japan, the United Kingdom, France, Switzerland, and Mexico. CBDCs are digital forms of currency issued directly by central banks. Unlike decentralized virtual assets such as Bitcoin and Ethereum, CBDCs are controlled and issued by central banks.

The Agora Project seeks to explore the potential improvements in the monetary system by utilizing tokenized deposits and institutional CBDCs. It focuses on resolving issues in cross-border payments, such as remittances, which have been pointed out previously.

Central banks in each country have conducted CBDC-related experiments primarily domestically. However, cross-border payments like remittances have faced challenges due to differences in laws and regulations, resulting in high costs and slow processing speeds.

The goal of this project is to move beyond the proof-of-concept phase and build a prototype stage before actual transaction implementation.

A Bank of Korea official stated, "Korea’s participation alongside major reserve currency countries in this project reflects international recognition of the results of Korea’s ongoing CBDC research. It is significant that Korea is involved from the beginning in setting new standards for global financial infrastructure and that Korean private institutions will have opportunities to explore new business areas."

In the future, BIS and IIF plan to announce calls for participation targeting private financial institutions in the countries involved in the project.

Meanwhile, since announcing the progress of the CBDC pilot test in November last year, the Bank of Korea is preparing to conduct a usability test of the CBDC with 100,000 general public participants in the second half of this year.