BOK to Expand Digital Currency Pilot…Treasury Disbursements to Be ‘Tokenized’

The Bank of Korea (BOK) is moving ahead in earnest with the second phase of “Project Han River,” a pilot to build digital currency infrastructure.

The BOK said on the 18th that it will launch “Project Han River Phase 2” in the first half of this year together with the government, related agencies and commercial banks. The project is an experiment to build a new payments and settlement infrastructure using a wholesale digital currency and deposit tokens, with the Financial Services Commission and the Financial Supervisory Service jointly participating.

Phase 2 focuses on expanding the scope of participation and use compared with the earlier stage. In Phase 1, roughly 80,000 people took part in 118,000 payment test transactions, validating the potential of a blockchain-based payments and settlement system.

Based on those results, the BOK enhanced the system by adding biometric authentication, person-to-person transfers and automated deposit-and-withdrawal functions. As a result, users will be able to use deposit tokens via fingerprint authentication and access automated deposit-and-withdrawal services linked to existing accounts.

“The digital currency being pursued under Project Han River has the characteristics of an intermediate stage between a CBDC and stablecoins,” the BOK said, adding that “for financial institutions, it will be an opportunity to try using it in advance in preparation for the possibility of future institutionalization.”

The roster of participating banks has also been expanded. With Kyongnam Bank and iM Bank joining the existing seven, a total of nine banks will participate in the pilot. The BOK plans to broaden use cases across a range of industries on the back of lower payment fees.

In particular, linkage with government programs is seen as key in this phase. In the first half, the BOK plans to apply deposit tokens in the form of digital vouchers to the Ministry of Climate, Energy and Environment’s EV charging infrastructure buildout project, with the aim of improving transparency in treasury disbursements.

In the second half, it will also conduct real-transaction tests with the general public. Work to expand where deposit tokens can be used is being carried out in parallel.

The BOK plans to advance the project through Phase 3, and in later stages it is considering the establishment of low-cost payment instruments, an expansion of programmable financial services, and links to the digital asset ecosystem.