South Korean authorities shared their financial technology plans, which include active preparations for central bank digital currency (CBDC) adoption and testing zero-knowledge proof (ZKP) technology to improve transaction privacy.
The Bank of Korea (BOK) released a report on payment and settlement systems for 2022, in which BOK officials outlined the progress of the future central bank digital currency (CBDC) test trials and further regulation of the sector.
The report shows that BOK continues active preparations for CBDC introduction, exploring its use for offline payments and international trade. 14 local commercial banks and the Korea Financial Telecommunications & Clearings Institute were involved in the tests to verify the performance of the future CBDC.
In the test trials, the system processed 2,000 transactions per second, which was higher than most local payment systems, but its speed slowed down when it reached maximum utilization. Therefore, existing developments still require further improvements.
BOK also tested the possibility of using a zero-knowledge proof protocol to enhance the privacy of the future CBDC system. This allowed wallet addresses and payment amounts to be hidden, but the speed of transaction processing slowed down considerably. The bank officials say they’ll continue to explore ZKP’s capabilities.
Read more about zero-knowledge proof (ZKP) technology and the challenges it can solve in a special piece by CP Media.
The report also mentions the government’s success in regulating the cryptocurrency market and plans to strengthen control over the payment services of major tech companies. The National Assembly of South Korea recently approved a new legislative initiative aimed at regulating the crypto market in the country.
