The Bank of Korea has kicked off phase two of its digital won pilot — a more ambitious, real-world test aimed at proving whether bank-issued deposit tokens built on central bank infrastructure can handle everything from government subsidy disbursements to everyday consumer transfers and payments.
Project Hangang’s second phase expands the group of participating banks from seven to nine, adding Kyongnam Bank and iM Bank to the original cohort. These institutions will now run large-scale trials of won-pegged deposit tokens that sit on top of a wholesale CBDC layer, testing interoperability, settlement and real-world payment flows at scale.
“Participating banks are actively securing diverse use cases, such as large businesses and small merchants with high public relevance and significant payment fee burdens, focusing on the potential for drastically reduced fees when using digital currency for payments,” said Kim Dong-sub, head of the Bank of Korea’s digital currency planning team, according to Chosun. Reducing transaction costs is a stated priority: the BOK hopes deposit tokens will offer a lower-cost alternative to credit-card processing for both big companies and fee-sensitive small merchants.
Phase two also addresses limitations exposed in the initial trial. Peer-to-peer transfers, which proved difficult in Phase 1, will be enabled in the new tests — a critical capability if the system is to support everyday payments and person-to-person value transfer.
The timing is notable. South Korea’s broader crypto framework, the Digital Asset Basic Act (DABA), has been delayed amid regulatory disagreement over who should have authority to issue KRW‑pegged stablecoins. That debate underscores the delicate balance between public CBDC initiatives and private stablecoin issuance as the country shapes its digital-asset rules.
The BOK and government are also eyeing immediate, practical uses: Kim said the government aims to begin disbursing subsidies in digital currency during the first half of this year, with electric-vehicle charging infrastructure subsidies expected to be among the initial use cases. The central bank has even flagged plans to enable digital won payments by “AI agents” — autonomous systems that could search for and purchase goods and services on behalf of users.
As Project Hangang moves into large-scale, real-world testing, the results will be closely watched by banks, merchants and policymakers alike: they will help determine whether a bank-issued, CBDC-backed token model can deliver cheaper, faster payments while fitting into South Korea’s evolving regulatory landscape.
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