South Korea’s central bank has inked a deal with technology giant Samsung Electronics (NASDAQ: SSNLF) in connection with its plans for a central bank digital currency (CBDC) amid a frantic rush by global banking regulators.
The Bank of Korea (BoK) and Samsung recently signed a Memorandum of Understanding (MoU) at Samsung Digital City in Suwon to deepen research into CBDCs. The new deal will see Samsung spearhead experiments on offline payment functionality for BoK’s CBDC.
Details of the agreement suggest that the main focus of the study will revolve around the use of near-field communication (NFC) on Samsung devices without relying on internet connectivity. The BoK is placing a premium on offline payments for its CBDC to compete favorably with the existing payment platforms in the country.
“Based on cooperation between the two companies, we expect to be able to make a great contribution to the development of global offline CBDC technology,” said Samsung Electronics vice president Won-Joon Choi.
Samsung has beefed up its security protocol ahead of the start date of the MoU by obtaining new hardware certifications for the Security International Common Criteria. Choi remarked that the new partnership would allow Samsung to deploy its extensive security measures and experience with digital assets to assist the central bank.
“It is very meaningful that we developed the first offline CBDC technology for a central bank together with Samsung Electronics,” said Lee Seung-heon, Vice President of the BoK. “I look forward to getting out.”
This is not the first time Samsung will dabble in CBDCs, as the firm played an integral role in the BoK’s CBDC simulation experiment. In the 10-month study, Samsung and a group of private tech firms assisted the BoK in proving the viability of retail CBDCs for the local payments ecosystem.
Amid its fascination for a digital won, Samsung issued an internal memorandum precluding employees from using generative Artificial Intelligence (AI) platforms following a data breach involving ChatGPT-3.
The state of offline CBDCs
Central banks around the world are allocating resources toward the development of offline functionalities for CBDCs. The Bank of Canada has emerged as a leader in the space following the publication of a robust staff analytical note offering solutions for intermittent offline payments and a lengthy absence of internet connectivity.
“A CBDC that operates offline is more resilient than other electronic methods of payment because it does not require an internet connection,” read the note. “As a result, consumers can continue to transact when conventional methods, such as credit and debit cards, are unavailable because of internet failure.”
The Reserve Bank of India (RBI) joined the league of central banks experimenting with offline CBDC payments leveraging on NFCs and QR codes to process payments.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
Watch: Blockchain provides perfect foundation for CBDC
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