South Korea's digital won is about to leave the laboratory. The Bank of Korea and nine commercial banks are finalizing preparations for live transactions using bank-issued deposit tokens, expected to begin in September as the centerpiece of the second phase of Project Hangang — the country's central bank digital currency pilot.

Nine Banks, One Shared Ledger

Phase two expands the program's banking roster from seven institutions to nine, with Kyongnam Bank and iM Bank joining original participants including Kookmin, Shinhan, Hana, Woori, Nonghyup, the Industrial Bank of Korea, and Busan Bank. Together, the lenders will conduct large-scale testing of won-pegged deposit tokens — digital representations of commercial bank money that settle over the Bank of Korea's wholesale CBDC infrastructure.

The architecture is deliberately two-layered: the central bank supplies the settlement backbone, while commercial banks issue the consumer-facing tokens — preserving the existing banking structure rather than routing citizens' money directly through the central bank.

From System Tests to Real Money

The move to live transactions marks a decisive shift in emphasis. Phase one, which ran from April to June last year, was about proving the plumbing worked: roughly 81,000 participants transacted through e-wallets, completing about 114,900 deposit-token payments, largely via QR codes at participating merchants. Phase two is about commercialization — embedding the tokens into banks' core account systems so they function inside everyday banking rather than in a sealed test environment.

The use cases being lined up are pointedly practical. Participating banks are recruiting scenarios with high public relevance — from large corporations to small merchants — with a heavy focus on slashing payment fees. Kim Dong-sub, who leads the Bank of Korea's digital currency planning team, has said banks are actively targeting users burdened by significant processing costs, highlighting the potential for drastically reduced fees when payments run over digital currency rails instead of card networks. The phase also extends into public finance: the government plans to trial deposit tokens and digital vouchers for distributing subsidies and policy funds, aiming to cut administrative costs and ensure welfare payments reach the right recipients without leakage.

The Bigger Picture

The September milestone slots into an increasingly ambitious national roadmap. South Korea's Ministry of Economy and Finance has already announced a follow-on pilot linking tokenized government bonds to the Bank of Korea's wholesale CBDC system in 2027 — sketching an architecture in which central bank money settles, commercial bank tokens circulate, and sovereign debt becomes the first major tokenized asset class on the rails.

The push comes amid an unresolved domestic policy debate: the country's Digital Asset Basic Act remains delayed over disputes about who should be permitted to issue won-pegged stablecoins — banks alone, or fintech and tech firms too. That makes the September launch more than a technical trial. If deposit tokens prove they can move real money at lower cost across nine banks, the central bank's model becomes the incumbent standard the private stablecoin debate must measure itself against.

Source: Based on Bank of Korea announcements and reporting via CoinDesk, The Block, and Korean media including Chosun and ET News.