South Korea's five major banks - KB Kookmin, Shinhan, Hana, Woori and NH NongHyup Bank - have checked the potential to improve inter-institution payment transactions globally.

The financial sector said on May 28 that commercial banks joined Project Agora, which is jointly promoted by the Bank for International Settlements (BIS) and the Institute of International Finance (IIF).

Project Agora is a global joint project involving major central banks in the United States and Europe, as well as private financial institutions. Commercial banks were also listed as participating institutions.

The project focuses on boosting the efficiency of cross-border payments and settlements based on tokenised central bank reserves and commercial bank deposits.

An official project report said participants tested the potential to cut costs and time in large cross-border payment processes using blockchain-based technology and smart contracts. It also confirmed that the reliability and stability of the financial system can be secured while maintaining the legal nature of existing central bank reserves and commercial bank deposits.

Project Agora is expanding the scope of global cooperation, including the recent additional participation of the Bank of Canada. Actual transaction tests are also expected to be carried out later, centred on some participating institutions and currencies.

A Shinhan Bank official said, "We verified the potential of next-generation cross-border payment infrastructure together with major global financial institutions." The official added, "In follow-up actual transaction tests, we will also confirm the usability of won-based deposit tokens and broaden the foundation for global payment solutions for corporate and financial institution customers."

Choi Tae-hwan (최태환), a deputy general manager in Woori Bank's Digital Innovation Division, said, "Participation in Project Agora and Project Hangang is highly meaningful in that it verifies future payment and settlement infrastructure together with global financial institutions." He added, "We will continue to push verification of next-generation financial technology and digital financial innovation to enhance customer convenience."