Consumer electronics behemoth Samsung is considering working with the Bank of Korea to introduce a national digital currency.
The South Korean electronics company revealed on Monday (May 16, 2023) that it has reached an agreement with the nation’s central bank to carry out technical analysis on the virtual currency.
Samsung said such a CBDC, which refers to a digital currency issued by a central bank, would work “offline” and could be sent between owners of its Galaxy smartphone and smartwatches thanks to a secure chip in the devices.
Payments could be made between devices through the use of near-field communication technology, which is built into smartphones to enable contactless payments, Samsung said.
Samsung said it developed a solution applying NFC technology to CBDCs last year. The company said that this allowed customers to pay even when there was no internet connectivity.
In a press release Monday, Samsung said the firm, along with Bank of Korea, would look to “continue researching how to minimize security risks associated with offline payments, to support reliable transactions in emergency situations even without network connections.”
“We are very pleased to be the first central bank to develop offline CBDC technology in partnership with Samsung Electronics,” Seungheon Lee, senior deputy governor at the Bank of Korea, said in a press release.
“Through the establishment of this MOU, we hope that the Republic of Korea will continue to lead the way in the field of offline CBDC technology, a sector that is being actively explored by global central banks,” he added.
Won-Joon Choi, Samsung’s executive vice president of mobile experience, said: “This collaboration with Bank of Korea has allowed us to apply Samsung’s advanced security innovations to the digital currency field.”
“We expect our collaboration to make a valuable contribution to the advancement of global offline CBDC technology,” he added.
Countries from China to the U.S. are advancing their research and experimentation with so-called CBDCs in the hope that it could become easier for consumers to send money instantaneously.
China has already created a digital version of the Chinese yuan and is trialing its CBDC in numerous cities, while the U.S., too, is closely examining whether to roll out a digital version of the dollar, and how this would work.
Given how simple it is to conduct transfers using currently available methods like internet banking, money transfer applications, and cryptocurrencies, several observers have questioned the viability of issuing CBDCs.
There are now several privately produced digital currencies that enable almost instantaneous payments. But the vast majority of tokens like bitcoin are highly volatile. Stablecoins have been touted as a possible solution to this although governments are wary of tokens issued by private companies.
Still, there remain clear headaches for businesses when it comes to instant settlements of transactions. The way the banking system is set up means that it can often take days for payments from merchants’ customers to actually settle.
This is a problem that both private businesses and governments are trying to solve with the help of cutting-edge technology like blockchain and virtual currency.
