FSC Designates BOK's Project Hangang Phase 2 as Innovative Financial Service

The Bank of Korea's central bank digital currency, or CBDC, deposit-token project, Project Hangang, will proceed to a second phase of testing. The new stage expands the pool of participating banks and users, and adds wallet-to-wallet transfers and a pilot program for treasury fund disbursements.

The Financial Services Commission said in a statement on July 15 that it had newly designated five innovative financial services, including Project Hangang Phase 2. It also designated BNK Kyongnam Bank and iM Bank as new providers of deposit-token-based payment and settlement services for the project.

The commission also revised the innovative financial service designations for seven banks that joined the first phase of Project Hangang: KB Kookmin Bank, Shinhan Bank, Woori Bank, Hana Bank, NH NongHyup Bank, Industrial Bank of Korea and Busan Bank.

In the second phase, the number of deposit-token users will rise to as many as 500,000 from a previous cap of 100,000. Places where the tokens can be used will also expand from existing merchants to small business owners and large companies. In addition to payment functions, the phase will include wallet-to-wallet transfers and a pilot program for treasury fund disbursements.

The project will also introduce convenience features including automatic conversion for deposits and withdrawals, biometric authentication, higher holding and transfer limits, non-face-to-face electronic wallet opening for businesses, and cash receipt issuance.

The FSC said Project Hangang Phase 2 will test expanding distributed ledger technology, or DLT, based payment and settlement into public-sector areas such as treasury fund disbursements. It will also examine whether smart contracts can simplify settlement procedures, reduce post-verification costs and help prevent fraudulent claims.