What to Know

  • The Bank of Korea is scheduled to begin the second phase of its central bank digital currency pilot in September.
  • The next stage will involve real transaction testing with nine participating banks.
  • The Bank of Korea will provide the infrastructure for the institutional CBDC, while banks will conduct business using deposit tokens.
  • Gyeongnam Bank and iM Bank are among the banks joining the expanded pilot.
  • Major lenders including KB Kookmin, Shinhan, Hana and Woori Financial Group are also participating in the CBDC project.
  • The initiative is intended to help create an environment where the won can be traded freely regardless of time or place.
  • South Korean banks are also preparing infrastructure for potential won backed stablecoins as policy discussions evolve.
  • The Ministry of Economy and Finance has announced plans to update the national asset law to classify cryptocurrencies as national assets.

Bank of Korea Moves CBDC Pilot Into Live Transactions

The Bank of Korea is preparing to advance its central bank digital currency program into a more practical stage, with live transaction testing scheduled for September. The second phase of the initiative will expand participation to nine banks and move beyond controlled experimentation into real transaction rails designed to test how a digital won environment could function across the financial system.

The project centers on an institutional CBDC infrastructure provided by the central bank. Participating banks will use that infrastructure to issue and manage deposit tokens, allowing the pilot to assess how commercial bank liabilities can interact with central bank digital settlement systems. This structure is important because it does not simply test a consumer facing token in isolation. It examines whether bank issued digital deposit instruments can operate on shared rails backed by central bank architecture.

A Bank of Korea official said the central bank will provide the infrastructure for the institutional CBDC and that each bank will conduct its own business using deposit tokens. The official also said the second phase is intended to lay the groundwork for commercialization. That framing suggests the pilot is not being treated merely as a research exercise, but as a step toward understanding what a future digital won system could require in terms of settlement design, compliance, banking operations and user accessibility.

Nine Banks Join Expanded Digital Won Testing

The expanded phase will include a total of nine participating banks. Gyeongnam Bank and iM Bank are among those named in the project, while the country’s leading banking groups are also taking part. KB Kookmin, Shinhan, Hana and Woori Financial Group are participating in the CBDC initiative, giving the test a broad base across South Korea’s commercial banking sector.

The involvement of major banks is a significant feature of the pilot. A digital currency framework cannot be evaluated only through central bank technology; it must also be tested through the institutions that manage deposits, customer access, payments, compliance controls and settlement activity in day to day finance. By bringing large lenders into the live testing environment, the Bank of Korea can examine how deposit tokens may move across commercial lines while still relying on infrastructure anchored by the central bank.

The government has described the goal as creating an environment where the won can be traded freely regardless of time or place. For market participants, that statement points to a broader policy ambition: a payment and settlement network that can operate with fewer time based and location based constraints than traditional banking systems. While the pilot remains a test, the direction is clear. South Korea is exploring whether tokenized money can improve the flexibility of domestic finance without removing regulated banks from the process.

Deposit Tokens Sit at the Center of the Pilot

Deposit tokens are central to the Bank of Korea’s current approach. In simple terms, they can be understood as tokenized representations of commercial bank deposits. Unlike privately issued crypto assets, they are designed to operate within the banking system and are expected to be connected to regulated financial institutions. In the Bank of Korea pilot, participating banks will conduct their own business using these deposit tokens on central bank provided infrastructure.

This design reflects one of the most important debates in digital currency policy. Central banks can develop CBDCs that interact directly with the public, or they can build institutional settlement layers that work through commercial banks and payment providers. South Korea’s current testing highlights a model in which commercial banks remain central to customer facing activity while the central bank supplies the trusted settlement foundation.

For banks, the test may provide early insight into how tokenized deposits could change payments, settlement, liquidity management and digital wallet services. For regulators, the pilot creates a controlled setting to examine risk controls before any wider rollout is considered. For consumers and businesses, the eventual promise is a won based digital payment environment that could be available more continuously and move more easily across institutions.

CBDC Development Remains Uneven Worldwide

South Korea’s push comes at a time when central banks around the world are taking different paths on CBDCs. Only a small group of countries have officially introduced a central bank digital currency. The Bahamas unveiled one in October 2020, Nigeria followed in 2021 and Jamaica introduced one in 2022, based on tracking from the Atlantic Council’s CBDC work.

Global experimentation, however, is much broader than full launch activity. The tracker shows 41 countries are testing a CBDC, while 33 more have one in development. It also shows 15 inactive projects and nine cancelled projects. Those figures underline how complex CBDC implementation can be. Technical feasibility is only one part of the challenge. Central banks also need to consider privacy, commercial bank funding, cyber resilience, public adoption, legal authority and the relationship between state backed money and private digital assets.

The United States is moving in a different direction from some other major economies. The U.S. Senate passed a bill last month that included a four year ban on CBDCs, although President Donald Trump has put signing it into law on hold. That contrast makes South Korea’s September pilot especially notable. While some jurisdictions are slowing or restricting CBDC development, Seoul is continuing to test practical institutional rails.

Stablecoin Preparations Add Another Layer

The Bank of Korea’s CBDC work is unfolding alongside growing activity around won backed stablecoins. South Korean banks are preparing for a potential competitive landscape in which privately operated digital money products may emerge under future legislation. This does not mean every bank has committed to issuing a stablecoin, but it does show that lenders are positioning themselves for a market in which tokenized money could become part of mainstream financial infrastructure.

Hana Bank has started designing systems that could support a future won backed stablecoin. Those systems include issuance, redemption, settlement, digital wallets and anti money laundering controls. The bank has not committed to issuing a stablecoin, but infrastructure preparation ahead of legislation indicates that major lenders want to be ready if the policy environment allows such products.

The relationship between CBDCs, deposit tokens and stablecoins is likely to be a defining issue for South Korea’s digital finance strategy. A CBDC is issued and managed by a central bank and is considered legal tender. A bank deposit token represents a claim within the commercial banking system. A stablecoin is typically issued by a private entity and designed to maintain value against a reference asset such as a national currency. Each model has different implications for risk, regulation and market structure.

Crypto Policy Reform Broadens the Financial Agenda

South Korea is also moving to update its treatment of cryptocurrencies at the government level. The Ministry of Economy and Finance has announced plans to revise the country’s seven decade old national asset law to classify cryptocurrencies as national assets. That proposal fits into a wider effort to bring blockchain based value and digital assets into formal public finance frameworks.

The planned update is important because legal classification helps determine how assets are accounted for, managed, supervised and potentially used by public bodies. Classifying cryptocurrencies as national assets would not resolve every policy question around digital assets, but it would mark another step toward formal recognition within the country’s financial and administrative systems.

Taken together, the CBDC pilot, bank stablecoin preparations and national asset law update show that South Korea is not approaching digital finance through a single channel. Policymakers and financial institutions are examining central bank money, commercial bank tokens, private stablecoin infrastructure and cryptocurrency classification at the same time. That creates a complex but potentially coordinated path toward blockchain based financial modernization.

Why the September Test Matters

The September pilot matters because it shifts the CBDC discussion from design principles into live transactional activity. Real transaction testing can reveal issues that laboratory environments may not fully capture, including operational frictions, settlement timing, user experience, compliance workflows and the technical demands of coordinating multiple banks on shared rails.

For technical traders and digital asset market observers, the pilot may also influence how South Korea is viewed as a blockchain policy hub. The country already has an active digital asset market and a sophisticated banking system. A central bank led test involving major lenders could strengthen perceptions that South Korea intends to build regulated digital money infrastructure rather than leave innovation only to offshore crypto venues or unregulated payment channels.

Commercialization is not guaranteed, and the Bank of Korea’s next steps will depend on testing results, policy review and broader financial stability considerations. Still, the move into a second phase with nine banks gives the project greater institutional depth. If the pilot demonstrates that deposit tokens can operate safely and efficiently on central bank infrastructure, it could become a key reference point for future digital won development.

Frequently Asked Questions (FAQs)

When will the Bank of Korea begin the second phase of its CBDC pilot?

The second phase is scheduled to begin in September. It will include real transaction testing and participation from nine banks.

How many banks are participating in the expanded CBDC test?

The expanded pilot will include nine participating banks. Named participants include Gyeongnam Bank, iM Bank, KB Kookmin, Shinhan, Hana and Woori Financial Group.

What role will the Bank of Korea play in the pilot?

The Bank of Korea will provide the institutional CBDC infrastructure. Participating banks will conduct their own business using deposit tokens on that infrastructure.

What are deposit tokens?

Deposit tokens are tokenized forms of commercial bank deposits. In this pilot, they are being used to test how bank issued digital money can operate with central bank provided infrastructure.

Is South Korea launching a digital won in September?

The September phase is a pilot with live transaction testing, not a confirmed nationwide launch. The Bank of Korea has described the phase as groundwork for possible commercialization.

Why are South Korean banks preparing stablecoin systems?

Banks are preparing for potential future legislation and competition around won backed stablecoins. Hana Bank, for example, has started designing systems for issuance, redemption, settlement, digital wallets and anti money laundering controls, while not committing to issuance.

How common are CBDCs globally?

Only a handful of countries have officially introduced CBDCs, including the Bahamas in October 2020, Nigeria in 2021 and Jamaica in 2022. Globally, 41 countries are testing a CBDC and 33 more have one in development.

What is South Korea doing with cryptocurrency classification?

The Ministry of Economy and Finance plans to update the national asset law to classify cryptocurrencies as national assets. The move is part of a broader effort to bring blockchain into public finance.

Why does this CBDC pilot matter for digital finance?

The pilot matters because it tests real transaction rails involving major banks, deposit tokens and central bank infrastructure. The results could shape how South Korea develops regulated digital money systems in the future.

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