The Bank of Korea is launching the second phase of its central bank digital currency pilot in September, expanding real-world transaction testing to nine commercial banks as the country advances toward commercializing a digital won. The next stage of Project Hangang will shift from limited payment trials to live transactions using bank-issued deposit tokens settled on the Bank of Korea's wholesale CBDC infrastructure, with new capabilities including peer-to-peer transfers and government subsidy disbursements. After the initial phase that included seven banks, the pilot has expanded to nine banks by adding Kyongnam Bank and iM Bank to the existing consortium of KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank, NH Nonghyup Bank, Industrial Bank of Korea and Busan Bank. Unlike a retail CBDC model where the central bank issues digital currency directly to consumers, South Korea's approach places commercial banks at the centre of customer-facing services while using the central bank's digital currency solely as the settlement layer between institutions.
Kyongnam Bank and iM Bank Join Nine-Bank CBDC Consortium
After the initial phase that included seven banks, the second phase of the CBDC pilot has expanded to nine banks, adding Kyongnam Bank and iM Bank to the existing group of participants. The original consortium includes KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank, NH Nonghyup Bank, Industrial Bank of Korea (IBK) and Busan Bank. Together, the banks will issue deposit tokens backed by a wholesale CBDC supplied by the central bank.
A Bank of Korea official told Yonhap: "The Bank of Korea will provide the infrastructure for the institutional CBDC, and each bank will conduct its own business using deposit tokens. From the second phase, we will lay the groundwork for commercialization."
Bank of Korea Expands Pilot From Payment Validation to Live Transactions
The upcoming trial builds on the first phase of Project Hangang, which ran from April to June 2025. That initial pilot attracted approximately 81,000 participants, who completed nearly 115,000 transactions using digital wallets and bank-issued deposit tokens. The exercise focused primarily on validating the underlying payment infrastructure rather than testing broader commercial use cases.
The second phase significantly expands the scope of testing. In addition to standard retail payments, participants will be able to use peer-to-peer transfers, biometric authentication and automated deposit token features. The pilot will also test the distribution of selected government subsidies through tokenized bank deposits.
Commercial Banks Issue Deposit Tokens on BOK Wholesale CBDC Infrastructure
Rather than launching a consumer-facing digital won immediately, the Bank of Korea is continuing to pursue a deposit token model. Under this approach, commercial banks issue digital tokens representing customer deposits, while the Bank of Korea provides the wholesale CBDC infrastructure that enables settlement between financial institutions. The model is designed to preserve the role of commercial banks in the payment system while introducing blockchain-based settlement and programmable payment capabilities.
Industry observers view the approach as a potential middle ground between a full retail CBDC and privately issued stablecoins. It also reflects the Bank of Korea's preference for maintaining oversight of the settlement layer while allowing banks to innovate on customer-facing payment services.
FAQ
What is the Bank of Korea launching in September?
The Bank of Korea is launching the second phase of its central bank digital currency pilot in September, expanding real-world transaction testing to nine commercial banks. The pilot will shift from limited payment trials to live transactions using bank-issued deposit tokens settled on the Bank of Korea's wholesale CBDC infrastructure.
Which banks are participating in the Bank of Korea CBDC pilot?
Nine banks are participating in the second phase: KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank, NH Nonghyup Bank, Industrial Bank of Korea, Busan Bank, Kyongnam Bank and iM Bank. Kyongnam Bank and iM Bank joined after the initial seven-bank phase that ran from April to June 2025.
How does South Korea's deposit token model differ from a retail CBDC?
Unlike a retail CBDC where the central bank issues digital currency directly to consumers, South Korea's deposit token model places commercial banks at the centre of customer-facing services. Commercial banks issue digital tokens representing customer deposits, while the Bank of Korea provides the wholesale CBDC infrastructure that enables settlement between financial institutions.
