Bank of Korea Enlarges Digital Won Pilot to Nine Banks

(AsiaGameHub) –   The Bank of Korea has launched the next phase of Project Hangang, its digital won initiative centered on wholesale CBDC infrastructure and bank-issued deposit tokens. For observers of digital currency policy, the key takeaway is clear: South Korea is moving beyond simple retail payment simulations. The system is now being utilized for actual government subsidy distributions while expanding the consortium of participating banks.

Key Takeaways

• Project Hangang Phase 2 has expanded to include nine commercial banks, up from the initial seven.
• Live testing now incorporates the distribution of government subsidies.
• In February, the Bank of Korea stated that won-pegged stablecoins should be issued exclusively by licensed commercial banks rather than through open, unrestricted issuance.

South Korea Implements Deposit Tokens in Real-World Scenarios

While many CBDC pilots remain confined to controlled environments, South Korea is adopting a more pragmatic approach. During Phase 2 of Project Hangang, the Bank of Korea is utilizing deposit tokens integrated with a wholesale CBDC framework for two practical applications: distributing government subsidies and facilitating general payment and transfer services. This elevates the project beyond a mere laboratory experiment, providing regulators and financial institutions with a platform to evaluate how a digital won ecosystem might function within everyday finance.

The roster of participating banks has also grown. Kyongnam Bank and iM Bank have joined the original seven participants: KB Kookmin, Shinhan, Woori, Hana, NH Nonghyup, IBK Industrial, and BNK Busan Bank. The initiative is being conducted with the cooperation of the Financial Services Commission and the Financial Supervisory Service.

The Bank of Korea has maintained a cautious tone, describing the project as a hybrid between a CBDC and stablecoins rather than an immediate, full-scale rollout of a retail central bank digital currency. For the banks involved, the objective is to assess potential future regulations and infrastructure requirements before institutional adoption becomes formal policy.

In summary, the project highlights the following:

1. The number of participating banks has increased from seven to nine.
2. Deposit tokens are undergoing testing for consumer transfers and subsidy payments.
3. New features include biometric authentication, automatic top-ups, and wallet-to-wallet transfers.
4. Expanded testing of real-world transactions is scheduled for the latter half of 2026.

Beyond a Single Pilot

Although Phase 1 demonstrated that the system could operate in a live environment, it also revealed certain limitations, such as lower-than-expected participation and payment volumes that were modest relative to the infrastructure costs. Phase 2 addresses these issues by attempting to make the system mirror conventional digital payments through improved wallet funding, peer-to-peer transfers, and fingerprint-based verification. Essentially, the goal is to transition deposit tokens from an experimental phase to a more practical, user-friendly state.

There is also a significant policy dimension to the pilot. In February, the Bank of Korea argued that the issuance of won-backed stablecoins should be restricted to licensed commercial banks to mitigate risks related to financial stability and money laundering. This position aligns with the structure of Project Hangang, suggesting that South Korea favors a bank-centric digital currency model over one driven by fintech firms or private cryptocurrency issuers.

For small businesses and emerging technology sectors, the implications extend beyond digital currency. Reports indicate that subsequent testing in late 2026 will explore reduced payment fees and new infrastructure designed for applications like AI-driven automated payments. Consequently, the digital won initiative encompasses broader themes, including payment settlement, merchant expenses, programmable money, and the future architecture of South Korea’s payment systems.

This makes Project Hangang relevant to more than just central bank analysts. For those tracking CBDC development, stablecoin regulation, tokenized deposits, or blockchain-based payments in Asia, South Korea is providing one of the most transparent examples of how these various elements may eventually integrate.