BOK to Use Wholesale CBDC, Not Stablecoins, in 2027 Tokenized Treasury Pilot

The Bank of Korea plans to use a wholesale central bank digital currency rather than private stablecoins as the settlement asset for a tokenized Treasury pilot set for 2027.

The Electronic Times reported on October 12, citing materials the BOK submitted to the National Assembly’s Strategy and Finance Committee for a parliamentary audit, that the central bank will use a wholesale CBDC as the payment asset in the government-bond tokenization pilot. It is not currently considering private stablecoins as a settlement method.

Tokenized Treasuries involve issuing and distributing conventional government bonds as blockchain-based digital assets. That would allow transfers of ownership and payment to be processed simultaneously, improving settlement efficiency. The BOK plans to use digital currency issued directly by the central bank to reduce counterparty settlement risk and ensure settlement finality.

Preparations for the pilot are also under way. In August, the BOK set up an asset tokenization team within its Digital Currency Office and has been discussing the project’s scope and implementation plan with the Ministry of Economy and Finance. It plans to work with related agencies, including the Financial Services Commission and the Korea Securities Depository, to review legal and technical requirements. As of September, however, a task force among the relevant institutions had not yet been formed.

The BOK’s existing digital-currency pilot, Project Hangang, will also be expanded. In the second phase, participating banks will increase to nine from seven, adding Kyongnam Bank and iM Bank. The number of people eligible to participate in real-world transactions will rise to 500,000 from 100,000, and the central bank plans to widen the use of deposit tokens to places such as convenience stores. It will also distribute 30 billion won in subsidies for electric-vehicle charging infrastructure construction in deposit tokens to test the efficiency of executing and settling government subsidy payments.

The related budget has also increased. This year’s budget for Project Hangang rose 61.8% to 12.52 billion won from 7.74 billion won a year earlier. The BOK plans to begin follow-up real-world transactions within the year and continue the pilot during the designation period for innovative financial services. The specific link between Project Hangang and the tokenized Treasury initiative, however, has not yet been decided.