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Hedera and Korea's Shinhan Bank Partner On KRW Stablecoin Pilot

Anna Martynova

Shinhan Bank, a leading bank in South Korea, announced that it has completed development of a prototype global mega-bank outside Korea built on the Hedera network, using stablecoins and targeting international money transfers. Using the Hedera Token Service (HTS) and the Hedera Consensus Service (HCS), the project aims to test the issuance and distribution of stablecoins applied to a financial use case that typically suffers from high fees, long wait times, and lack of tracking functionality.

In current financial systems, when individuals or organizations send cross-border transfers, the client incurs high costs of the intermediary bank. For cross-border transfers between countries that lack liquidity and a direct network, customers typically pay an additional $20 to $80 in intermediary fees on top of the normal cross-border transfer fees. It usually takes three to seven days to complete a transaction. In addition, the client cannot track his or her transfer. With a stablecoin solution developed by banks, individuals and organizations can send and receive funds in local stablecoins with very low fees.

Shinhan Bank plans to issue stablecoins backed by South Korean won (KRW), and a partner bank will mint stablecoins backed by its local currency. Clients will be able to buy KRW-based stablecoins issued by Shinhan Bank and send them to an account with a partner bank. The recipient will then be able to receive funds in stablecoin and exchange it for local currency. Both banks will use the Hedera Consensus Service (HCS) to both track and record transactions and confirm the exchange rate at the time of each transaction.

Image: Medium

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