The Bank of Korea (BOK) set out to develop a bond management system using blockchains. The central bank of Korea is considering adopting the entire process from bond issuance to settlement on a blockchain platform at once.
On Feb. 18, the BOK announced that it is conducting a proof of concept (PoC) after selecting operators that will run a blockchain-based pilot bond management and settlement system at the end of last year. The simulation development project is led by the Korea Digital Currency Research Team at the BOK.
In November2019, KEPCO posted a bid for a PoC project for Securities Payment and Settlement based on distributed ledger technology through the Korea Online E-Procurement System named “Nara Jangteo.” According to the announcement, the pilot project for the blockchain-based bond management system will proceed until the end of the first half of this year.
The main goal of the tentative blockchain-based bond management system being developed by the BOK is to simultaneously handle a series of processes from the issuance of bonds to settlement with blockchains. In the current bond system, settlement has to go through the Korea Securities Depository, but on the blockchain bond system, bond issuance and settlement can be integrated into one.
In order to implement this, the BOK is considering operating several nodes related to bond settlement to configure their own nodes on blockchains. In addition, the BOK believes that a system recovery will become easier with distributed node operation rather than with the current centralized system.
The BOK is also considering running multiple blockchain platforms. This is less efficient than running a single blockchain platform, but the BOK was experimenting on various configurations, the BOK said.
"In order to introduce blockchains to the bond settlement system, there are many legal issues that need to be reviewed, so we will not provide service right away," The BOK said. “We are checking whether the system is running nicely by focusing on technological points.”