South Korea’s central bank on Wednesday held a ceremony for the launch of its upgraded large-value interbank fund transfer system, which started operations last week.

The Bank of Korea’s real time gross settlement system is the nation’s only system handling transfers of large funds between financial institutions.

The system was first launched in 1994 and was upgraded previously in 2009, but the BOK has been building the “next-generation” version since 2015 to bolster its efficiency and safety.

The new system has established an additional account that allows financial institutions to receive loans from the BOK immediately when they lack money or liquidity in the process.

It also simplified the transaction process for financial institutions’ trading in the off-board bond market -- where all bonds including unlisted bonds can be transacted. The previous system required financial institutions to use accounts under the Korea Securities Depository in the process, before finalizing the transaction, but the new system has eliminated the part.

The nation’s finance industry had requested that the BOK upgrade the system in recent years as institutions faced difficulties in handling the delivery versus payment process through it.

Wednesday’s ceremony was scaled-down to uphold the country’s social distancing rules with just 20 officials attending, including BOK Gov. Lee Ju-yeol.

By Jung Min-kyung (mkjung@heraldcorp.com)