Initiatives to Further Improve BOK-Wire+
After the successful launch of the new generation BOK-Wire+, Bank of Korea is continuing to keep up its efforts to cope with the dynamic changes in the payment and settlement environment across the globe, and to identify any room for further improvement to enhance the safety and efficiency of the payment and settlement systems.
Global communities including G20, BIS, and other major central banks are seeking to enhance the interoperability of payment and settlement systems in order to facilitate more efficient cost cross-border payments. In doing so, they are endeavoring to strengthen the safety of systems by reducing settlement risks.
Against this backdrop, BOK-Wire+ is in the process of introducing the global standard for financial messages, ISO 20022. The Introduction of a global message standard will highly improve BOK-Wire+’s interoperability, increasing its potential for interlinking with overseas payment and settlement systems. It is also expected to increase efficiency of BOK-Wire+ by allowing more abundant and complete payment data to be transmitted throughout the payment chain.
Moreover, to enhance the safety of BOK‘s payment and settlement systems by reducing credit risk, as well as to prepare for potential cross-border interlinking with other payment and settlement systems, BOK is looking into developing an RTGS (real-time gross settlement) based fast payment system.
Korea’s Electronic Banking System, known to be the world’s first fast payment system, has been operated by Korea Financial Telecommunications and Clearings Institute (KFTC) since 2001. However, this system, in which funds are paid out to recipients (customers) before net settlement occurs between the sending and receiving banks, exposes the receiving bank to credit risk until the following business day (11:00 a.m.) when the credits and debits are settled. The effective management of this type of credit risk gained further importance since the outbreak of the pandemic (after 2020) as the growing demand for non-contact, non-face-to-face electronic payments has caused a sharp surge in the volume of transactions in the Electronic Banking System.
Going forward, BOK will continue to monitor the global and domestic payment and settlement environment and identify any necessary improvements needed to enhance it’s payment and settlement systems and services.