The Zhitong Finance App learned that the Bank of Korea officially launched the trial operation of the “BOK Won International Payment Network” (BOK Won International Payment Network) on Monday local time. This is the Bank of Korea's first payment and settlement network that operates 24 hours a day, 7 days a week, except on weekends and public holidays. It is also seen as a key step for South Korea to promote the internationalization of the won, facilitate overseas investors to participate in the settlement of Korean won transactions, and lay the foundation for opening up the local market to foreign investors to a greater extent next year.
The Bank of Korea said in a statement that the trial operation will begin at 9:00 a.m. on the 21st. The four commercial banks in Korea participating in the pilot include Kookmin Bank, Woori Bank, Hana Bank, and Shinhan Bank. At about 9:30 on the same day, the two domestic participating institutions completed the first test transaction, worth about 1.4 billion won (about 1 million US dollars).
The Bank of Korea also said that foreign banks will also join this system, but the exact time for joining during the trial operation phase is yet to be determined. According to the plan, the system will be fully operational in January next year, and major foreign banks are expected to join at that time.
The purpose of this settlement network is to enable investors from outside of Korea and non-residents from overseas to trade Korean won more freely. Through this system, overseas investors can directly settle in Korean won during business hours by opening an account with a “Registered Foreign Institution for Won Transactions (RFI-K)” (RFI-K) established overseas without going through a domestic financial institution in Korea.
The Bank of Korea pointed out that this is the first time that the Bank of Korea has operated a payment and settlement network that operates 24 hours a day except weekends and public holidays. The Bank of Korea anticipates that the establishment of this settlement network will significantly improve the convenience for foreign investors to access the won denominated payment infrastructure and help enhance the international status of the won.
The trial run is part of the Korean won internationalization roadmap announced by the Korean government this year. The Korean government announced relevant measures this year aimed at opening up the Korean foreign exchange market to global investors and seeking MSCI to upgrade Korean stocks to a developed market position.
Previously, South Korea had already pushed the foreign exchange market to extend trading hours. In July of this year, onshore USD/KRW transactions were changed to a 24-hour trading schedule. From January next year, overseas investors will be allowed to trade, transfer, and settle Korean won with each other outside of Korea. The launch of the Korean won international settlement network is an important part of this plan.
According to the schedule, the system will be put into trial operation for about three months. The Bank of Korea said it will continuously monitor the system to ensure its stable operation, and contribute to the development of South Korea's payment and settlement infrastructure through system and system improvements and expansion of participating institutions.