On the Hedera Network, Korea’s Shinhan Bank will test a new stablecoin proof-of-concept

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The Shinhan Bank, South Korea’s largest bank, has claimed that it has completed a proof-of-concept with a global megabank situated outside of the country. In collaboration with Hedera Hashgraph, the proof-of-concept was completed (HBAR).

The proof-of-concept was created to facilitate international remittances utilizing the Hedera Network and stablecoins. In addition, the Hedera Token Service (HTS) and the Hedera Consensus Service (HCS) will also be used to evaluate the production and distribution of stablecoins in a scenario that often involves long wait times, high costs, and no tracking capabilities.

Transaction Times are Significantly Reduced

Shinhan Bank’s new proof-of-concept can transport money globally in seconds for a considerably low transaction price through the Hedera Network. Hedera claims that average transaction fees on their network are as low as $0.0001 and that the average transaction time is roughly 3-5 seconds. Both of these measures represent considerable improvements over standard remittance methods’ transaction prices and timeframes.

Hedera said on November 29th that it is looking at the idea of issuing and distributing stablecoins for financial use cases, with lower fees and faster transaction speeds than current techniques and the ability to track transactions.

An Outdated Methodology

Individuals and companies must currently pay a considerable expense in exorbitant intermediary bank fees when making cross-border transactions. The fees are even greater if a transfer is required between nations that lack liquidity or a direct network. In addition to the standard cross-border transfer fees, the customer would be charged a high intermediary fee.

These transactions also take a long time to execute, taking anywhere from four to seven days on average. There is also no way for a consumer to keep track of the status of their transactions. Customers will get funds in a locally supported stablecoin with incredibly low fees when using Shinhan Bank’s stablecoin solution.

Remittances Using Stablecoins

Shinhan Bank will issue stablecoins backed by the South Korean won (KRW), while its partner bank will issue stablecoins backed by its currency. Customers can buy stablecoins backed by KRW produced by Shinhan Bank and transmit them to the partner bank’s specified account. The payments are subsequently sent to the recipients in a regionally backed stablecoin, which they can exchange for their local currency.

The participating institutions will use the Hedera Consensus Service to track and record the transaction. This will also verify the current foreign exchange rate at the time of the transaction.

An Important Market

Shinhan’s stablecoin solution, according to Hedera’s co-founder and CEO, presents a huge possibility to eliminate intermediaries and make remittances more efficient and cost-effective.

“International remittances were a massive market of $702 billion in 2020, with $539 billion going to low- and middle-income countries. There is a massive opportunity to cut out the middleman and make this process dramatically more efficient and cost-effective, getting the most money possible to people who often need it urgently. We commend Shinhan and their partner for developing this solution and are proud that it takes advantage of the economic and speed benefits that only the Hedera network can provide.”

A Financial Innovation Leader

Shinhan Bank, based in South Korea, is a pioneer in financial innovation and Distributed Ledger Technology. Shinhan has invested in the Korea Digital Asset Custody, a group of companies that provide digital asset custody services. In March, the bank also launched a demonstration platform for CBDCs, and in April 2021, it joined the Hedera Governing Council.

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