The Bank of Korea (BOK) is preparing to launch live pilot transactions for deposit tokens as early as September 2024. Building on the "Project Hangang" infrastructure, the central bank and nine commercial lenders will test peer-to-peer (P2P) transfers and the distribution of government subsidies, moving from initial technical verification to practical, real-world application.
Scaling Project Hangang to Real-World Transactions
The Bank of Korea’s initiative focuses on testing a blockchain-based Central Bank Digital Currency (CBDC) system where commercial banks issue deposit tokens for public use. According to the Bank of Korea, the project is currently in the final stages of preparation for its second phase, which includes finalizing system development and participant recruitment.
Unlike the first phase—conducted between April and June 2023—which focused on the technical lifecycle of digital currency from issuance to redemption, the second phase targets commercial viability. The 2023 pilot involved 81,000 participants and successfully processed 114,880 transactions. This upcoming phase will operate on an ongoing basis rather than following a fixed, short-term schedule.
Expanded Participation and Feature Set
The BOK has expanded the list of participating financial institutions to nine, up from the original seven. Joining the project are:
- Original Participants: KB Kookmin, Shinhan, Hana, Woori, NH NongHyup, IBK Industrial Bank of Korea, and Busan Bank.
- New Additions: Kyongnam Bank and iM Bank (formerly Daegu Bank).
The second phase introduces several user-focused features, including streamlined sign-up procedures, biometric authentication, and automated deposit token transactions. While the first phase relied on selected use cases, the BOK plans to expand the ecosystem by integrating merchants through Memorandums of Understanding (MOU) signed with the participating banks.
Integration with Government Subsidies
A core objective of the second phase is to test the use of deposit tokens for government financial support. The Ministry of Environment’s electric vehicle (EV) charging facility subsidy program is slated as the first practical application. Under this model, subsidies that were previously transferred to charging station operators via traditional bank accounts will be issued through deposit token wallets.
A final selection of the project operators is expected shortly following a review committee’s evaluation. Additionally, the BOK is coordinating with the Ministry of Economy and Finance to pilot the use of deposit tokens for public sector business expenses, with a target to select participating government departments by the end of 2024.
Public Sentiment and Regulatory Context
A national petition opposing the introduction of deposit tokens and CBDCs was submitted to the South Korean government last month, garnering a significant number of signatures. Despite this, the BOK maintains that its role is to provide the underlying infrastructure for a digital currency system, with the current focus remaining on establishing a foundation for potential commercialization.
Keep reading