Shinhan Bank and several other major financial institutions successfully tested stablecoins for cross-border money transfers.
Shinhan Bank, the oldest bank in Korea, tested cross-border settlements in national currencies using stablecoins. The project involved an unnamed Taiwanese financial institution and SCB TechX, the technology arm of Thailand’s oldest bank, Siam Commercial Bank. The project came to light through an announcement from the Hedera team, whose blockchain network was used for transactions.
Calculations were performed in real time in a specially designed test environment with Ethereum Virtual Machine (EVM) support. During the proof-of-concept, it was confirmed that any EVM-based stablecoins could be used in such transactions.
The process was organized as follows. All participating banks issued stablecoins denominated in local national currencies. Stablecoins formed liquidity pools with all partner banks. As a result, users could purchase stablecoins for local currency and make cross-border payments on accounts in the currencies of partner banks. Such a system eliminates intermediaries, reduces costs, and speeds up the process of money transfers.
It’s worth noting that Shinhan Bank’s current proof-of-concept was the second stage of the project. The first phase of testing was conducted in November 2021 together with South Africa’s Standard Bank, although the details of this project weren’t disclosed for a long time. In addition, Shinhan Bank is one of the South Korean Central Bank’s partners and has been allowed to participate in the first two phases of testing the retail central bank digital currency (CBDC).
