Decenter 2024-07-03
[Original Article] https://decenter.kr/NewsView/2DBLJHW9G8
Emergence of a Digital Reserve Currency, a Natural Progression... CBDC Plays a Role
Simplification of international transfers and cost reduction are advantages of CBDC...increased interest from banks
The preliminary issue is privacy protection...proposal to use zero-knowledge proof technology.
Doyeori (from left), Decenter News Team Leader, Han Seunghoon, Team Leader of Innovation Technology Platform at Woori Bank, and Jeong Yushin, Professor at Sogang University Graduate School of Technology, are conducting a panel discussion at the 'Digital Finance Innovation Forum' held at Lotte Hotel in Sogok-dong, Seoul on the 2nd. / Photo by Lee Hojae
"Even the most conservative central banks have embarked on developing blockchain-based Central Bank Digital Currencies (CBDCs), establishing blockchain as a technology of the future."
At the 'Digital Finance Innovation Forum' held at the Lotte Hotel in Sogok-dong, Seoul on the 2nd, Jeong Yushin, a professor at Sogang University's Graduate School of Technology, analyzed why countries around the world are accelerating their research and development of CBDCs. Professor Jeong stated, "In a situation where everything is becoming digitized, it is a natural progression for digital currencies that serve as reserve currencies to emerge. CBDCs issued by central banks on a blockchain basis can resolve trust issues that arise during the digitization process." The Digital Finance Innovation Forum is an event organized by Ripple and managed by Catalyze Research to discuss innovative solutions in traditional finance.
Han Seunghoon, the Team Leader of the Innovation Technology Platform at Woori Bank, also participated in the panel discussion on the same day and evaluated that the development of blockchain technology has led the global trend of CBDC research and development. Team Leader Han stated, "Blockchain technology has matured enough to be implemented, and there is a consensus that the characteristics of blockchain, which can be programmed through smart contracts and has a stabilized distributed ledger technology, can improve the current banking payment systems."
He cited the simplification of international transfer procedures and cost reduction as the advantages of CBDCs. The traditional complex process of international transfers, which required setting up a checking account at a foreign bank and going through numerous documentary procedures and stakeholders, can now be improved to the level of person-to-person transactions (PVP). He noted, "Compliance with U.S. regulations is very important when conducting international transfers, which are not automated and require manual processing. If real-time synchronization is possible through distributed ledger programming, it would be highly effective from a bank's perspective."
Woori Bank has shown significant interest in adopting CBDCs. It was the first among domestic banks to launch a CBDC pilot project in 2021. Recently, it has applied to participate in the international payment project 'Agora' being pushed forward by the Bank of Korea in collaboration with the Bank for International Settlements (BIS) and central banks of major reserve currency countries, and is awaiting the results. Team Leader Han mentioned, "We submitted the profiles of four divisions and bank experts at the end of last month, and the participation will be finalized on the 9th of next month. The core of the Agora project is to create a joint ledger for CBDCs and establish institutional and technical standards."
However, the issue of privacy protection remains a challenge to address. There is concern that if central banks can access users' payment and transfer information, it could lead to financial surveillance. In response, Professor Jung argued, "Just as the development of artificial intelligence (AI) technology cannot be hindered by privacy issues, neither can the introduction of CBDCs. It's about creating and operating strict standards and regulatory bodies that limit unauthorized use of personal information." Team Leader Han also noted, "The usability test of CBDCs, involving 100,000 actual users from December this year to February next year, is safe as it only transfers CI values, not actual information."
Claims have also been made that encryption technology can solve the privacy issues of CBDCs. Oh Hyun-ok, CEO of Zkrypto, speaking on the topic 'Public Blockchain-based Financial Services Utilizing Zero-Knowledge Proof for Privacy Protection,' pointed out that privacy issues can be resolved using zero-knowledge proof technology, which encrypts transaction details and stores data that verifies the transaction has been authenticated.
Doyeori (from left), team leader of the Decenter news team, Han Seunghoon, team leader of the Innovation Technology Platform at Woori Bank, and Jeong Yushin, professor at Sogang University's Graduate School of Technology, are participating in a panel discussion at the 'Digital Finance Innovation Forum' held at the Lotte Hotel in Sogok-dong, Seoul on the 2nd. / Photo by Lee Hojae
journalist Kim Jung-woo
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