South Korea’s Bank of Korea (BOK) has kicked off Phase 2 of Project Hangang, expanding its digital won pilot and testing real government payments for the first time.
Here’s what’s new:
- The pilot now includes nine banks (adding Kyongnam Bank and iM Bank to the original seven).
- For the first time, government subsidies are being distributed through CBDC-linked deposit tokens.
- New features aim to improve usability: biometric approvals, peer-to-peer wallet transfers, and automatic top-ups from linked bank accounts.
Phase 1 (April–July 2025) showed the system could work, but engagement was low: only ~80,000 of 100,000 invited users opened wallets, and total payments were under 700 million won despite 30–35 billion won spent on infrastructure. Phase 2 addresses these gaps and focuses on real-world transactions.
The BOK positions deposit tokens as an intermediate step between CBDCs and stablecoins, not a full retail digital currency yet. The goal is to test how public financial infrastructure can operate digitally, improve subsidy distribution efficiency, reduce misuse, and cut administrative costs.
Large-scale testing across all nine banks is planned for late 2026, aiming to lower payment fees for small businesses and enable future AI-powered automatic payments. LG CNS continues to provide technical infrastructure, and the BOK is keeping the project tightly controlled, emphasizing bank-led adoption over open-access models.
In short: Phase 2 moves Korea’s digital won from testing to real-world government payments, while refining features for wider adoption.
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