This is the abstract of an article on the new collateral system using the high technology which is contained in the Banking Law Journal, No.2 published in December 2004.

As the prudential requirements dominate the daily operation of financial institutions, creditor banks take to reliable security to stave off events of default of borrowers. On the other hand, borrowers would apply for more funds on the improved financial terms based upon the collateral.

Against these backdrops, more attention has been directed to new types of security interest. The European Bank for Reconstruction and Development proposed the Model Law on Secured Transactions in 1994, which was devised to support the transition economies in the Eastern and Central Europe. After UNIDROIT established the Convention on International Interests in Mobile Equipment, UNCITRAL finalized the Convention on Assignment in Receivables in International Trade in 2001.

The common thing that may be derived from the global trends is many-fold:
First, security is necessary for creditors to keep credit risk under control, while borrowers are entitled to better financial terms;
Second, enterprises should make most of every kind of assets including movables and account receivables;

Third, debtors need to use the collateral under their possession though those assets are granted as security. This kind of security is called as a non-possessory security right. So a public notice filing is indispensable to show the existence of or to create the security right. For instance, the newly amended Article 9 (Secured Transactions) of the Uniform Commercial Code of the United States purports to include the electronic registration.

The RFID tag is a kingpin in today's ubiquitous computing environment. When RFID tags are attached like bar codes to machinery and equipment so as to provide some useful information, they show the existence any security interest on the collateral through the RFID reader-writer. As a result, movables and specific inventory may be granted as security. It could be realized by establishing or amending some substantive and procedural laws. Also it is assumed that creditor banks are satisfied with these types of collateral.

The biggest beneficiaries are small and medium-sized enterprises (SMEs), which have been usually denied secured borrowings. Any machinery and equipment with considerable asset value are eligible for such secured loan. In the Gaeseong Industrial District, RFID might be employed for the long distance surveillance from the South and to prevent unauthorized take-out.

In the long run, there must be ever-increasing demand for such new businesses as security guards, inspectors and examiners of second-hand machinery. Most of all, a lot of jobs could be created to make a database of factory goods and to facilitate the transactions of such equipment.