Technology giant Samsung Electronics has signed a memorandum of understanding (MOU) with the Bank of Korea (South Korea’s central bank) to continue research into its central bank digital currency (CBDC) project, with a focus on offline payment functionality and improved security.
According to a press release (in Korean) issued on Monday, Samsung initially developed the offline payment technology while taking part in the second phase of the central bank’s 10-month CBDC simulation last year, which focused on retail use of the currency. The first phase of the trial was concerned with basic functionality such as issuance, distribution and redemption.
During the simulation, remittances and payments were made possible between devices using near-field communication (NFC) technology, even when neither device had an active internet connection.
This was achieved by using the embedded Secure Element (eSE) installed in Samsung devices to make the transactions. The eSE chipset has attained EAL 6+ grade hardware certification, the highest security level possible in the international common evaluation standard Common Criteria.
Using this technology as a base, Samsung and the Bank of Korea intend to use Samsung Galaxy smartphones and watches to continue to reduce the security risks associated with offline payments, in order to provide a stable and robust solution, even in the event of a disaster situation and/or prolonged network outage.
Vice President of Development of Samsung Electronics’ MX Business Division, Choi Won-joon said, "Through collaboration with the Bank of Korea, we were able to apply Samsung Electronics' high-level security technology to the digital currency field. We expect to be able to make a great contribution to the development of CBDC technology.”
The Bank for International Settlements (BIS) published a ‘comprehensive handbook for offline payments with CBDC’ just last week as part of its Project Polaris. This highlights, among other issues, the increased risk of double spending and counterfeit transactions when online checks are not available.
The paper notes that 49% of central banks surveyed by the BIS believe that offline functionality is essential for a CBDC, while a further 49% see the feature as advantageous.
As Observers has reported, a great many central banks from around the world are currently actively investigating or developing their potential digital currency strategy.
South Korea appears to be ahead of the curve when it comes to offline payment functionality, although it would seem unlikely that this feature will only be enabled for Samsung device owners if the CBDC progresses to a live environment.
How the Bank of Korea addresses this in the continuing development stage remains to be Observed.
Members Discussion