Bank of Korea to Begin Live CBDC Transactions With Nine Banks in September – FinanceFeeds

The Bank of Korea (BOK) is moving into the second phase of its central bank digital currency (CBDC) initiative this September, transitioning from controlled trials to live, real-world transactions. The expansion will involve nine commercial banks and marks a significant step toward potential commercialization of a digital won.

From Pilot to Live Payments

In this next stage of Project Hangang, participating banks will issue deposit tokens that represent customer deposits. These tokens will be settled on the BOK’s wholesale CBDC infrastructure, creating a clear separation between customer-facing services (managed by banks) and the institutional settlement layer (managed by the central bank). The move is designed to validate large-scale, interoperable payments under real conditions rather than limited sandbox tests.

Beyond standard retail payments, the pilot will introduce expanded features, including:

• Peer-to-peer transfers between users
• Distribution of selected government subsidies via tokenized deposits
• Biometric authentication for enhanced security
• Automated functions for programmable payments

Nine Banks Now Participating

The new phase grows the consortium from seven to nine banks. In addition to the original participants—KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank, NH Nonghyup Bank, Industrial Bank of Korea (IBK), and Busan Bank—the pilot now includes Kyongnam Bank and iM Bank.

Together, these institutions will issue deposit tokens backed by a wholesale CBDC provided by the central bank. A BOK official indicated that the central bank will supply and operate the institutional infrastructure while commercial banks develop and manage services for customers. Phase two is intended to lay the groundwork for broader commercialization should the results prove successful.

Why Use Deposit Tokens Instead of a Retail CBDC?

South Korea’s approach differs from a direct-to-consumer retail CBDC. Instead of the central bank issuing digital currency straight to the public, banks remain at the center of customer interactions. The wholesale CBDC serves as the settlement mechanism between institutions, while deposit tokens act as the customer-facing digital representation of bank deposits.

This model aims to:

• Preserve the established role of banks in payments and credit intermediation
• Enable programmable and blockchain-based settlement capabilities
• Maintain robust oversight of the core settlement layer by the central bank
• Encourage innovation by giving banks flexibility to design user experiences and services

Industry watchers view this as a pragmatic middle ground between a full retail CBDC and privately issued stablecoins, potentially combining the safety of central bank money for settlement with the agility of commercial bank product design.

What Phase One Achieved

The first phase of Project Hangang ran from April to June 2025, attracting around 81,000 participants who completed nearly 115,000 transactions using digital wallets and bank-issued deposit tokens. That stage focused on validating the technical and operational viability of the infrastructure rather than broad commercial applications.

With the core plumbing tested, the upcoming phase expands the scope to include real-world payments and more complex use cases, providing insight into scalability, user experience, compliance, and interoperability across multiple banks.

What to Watch Next

As live transactions commence, key areas of focus will include:

• Settlement efficiency and resilience across multiple banks
• User adoption and experience with new features such as P2P transfers and biometrics
• Operational readiness for programmable payments and automated functions
• Effectiveness of government subsidy disbursements via tokenized deposits
• Regulatory and compliance controls at scale

The outcome of this phase will inform whether and how a broader rollout could occur, as well as the balance between public infrastructure and private-sector innovation in South Korea’s future payment ecosystem.

Key Takeaways

• Phase two of the BOK’s CBDC pilot begins in September, moving to live transactions.
• Nine banks are participating, with Kyongnam Bank and iM Bank joining the original seven.
• The model centers on bank-issued deposit tokens settled via the BOK’s wholesale CBDC layer.
• New capabilities include P2P transfers, biometric authentication, automated features, and government subsidy distribution.
• This approach seeks to blend central bank oversight with commercial bank innovation, potentially paving the way for commercialization of a digital won.