Bank of Korea Says Project Hangang Differs From Stablecoins, Central Bank Money Still Needed

Central bank money is the final benchmark for settlement

Second round of Project Hangang testing to begin in late December

Project Agora also aims to promote the won’s internationalization

The Bank of Korea underscored the need for its deposit-token initiative, Project Hangang, saying central bank money will still be needed in the financial system even as digital assets help shape a new market structure.

Yoon Sung-kwan, a senior official at the Bank of Korea, outlined progress on Project Hangang and Project Agora at the 2026 Payment Insight seminar held at the Korea Chamber of Commerce and Industry in central Seoul on Oct. 23.

"Blockchain technology can improve the efficiency of financial transactions, but technological advances do not eliminate the need for central bank money," Yoon said.

He cited flexible liquidity provision, legal settlement finality, financial stability and the singleness of money as reasons central bank money remains necessary. The Principles for Financial Market Infrastructures, or PFMI, established by the Bank for International Settlements and the International Organization of Securities Commissions, also recommend the use of central bank money as a settlement asset whenever possible.

"Banks and securities firms participating in financial markets can always face liquidity shortages," Yoon said. "At such times, the only institution that can provide liquidity flexibly is the central bank."

He added that central bank money is a safe settlement asset with no credit or liquidity risk. It is also important for securing legal settlement finality and preserving the singleness of money.

Still, he stopped short of dismissing stablecoins altogether, saying they clearly have a role to play in other areas.

“Hangang token plays a different role from stablecoins”

Project Hangang is the Bank of Korea’s effort to apply the role of central bank money to a blockchain-based financial system. Under the model, users transact with deposit tokens issued by banks, while final interbank settlement is handled using wholesale digital currency issued by the central bank.

"Project Hangang is not about issuing wholesale digital currency to do something extraordinary," Yoon said. "It is about the Bank of Korea supporting banks in the background so their deposits can be used as deposit tokens on a more innovative platform and provide better services."

He said deposit tokens could offer benefits including programmability, control over asset ownership and usage rights, and simpler transaction procedures.

Representative use cases for the Hangang token include the disbursement of government subsidies and the management of expense accounts at public institutions. Yoon said there had been cases in the past in which government subsidies and official expense budgets were misused in the middle of the process, and that deposit tokens could help block inappropriate spending at the payment stage.

He again stressed that he was not denying a role for stablecoins, saying they clearly have uses in other areas.

Hangang is set to undergo a second round of live transaction testing at the end of this year. The test will increase participating banks to nine from seven and expand the number of users to 500,000 from 100,000. The central bank also plans to add more merchants that accept deposit tokens and improve related services for users.

“Deposit tokens can contribute to the won’s internationalization”

Yoon also laid out a blueprint for the won’s internationalization through Project Agora. The project is designed to reduce the time and cost of cross-border remittances using blockchain technology. Like Hangang, Agora also uses deposit tokens.

Explaining the limits of existing cross-border remittance systems, Yoon said required checks such as anti-money laundering reviews are conducted sequentially as funds pass through multiple banks. Under Agora, those checks can be carried out simultaneously, allowing a transaction to be completed at once once all conditions are met.

Agora tested a total of 30 cross-border payments in July using tokens backed by real value. The average settlement time was about 80 seconds.

The Bank of Korea is targeting commercialization of Agora in 2028. It also said that if the project is commercialized, won-denominated deposit tokens could become more useful in global markets.

"How to build a domestic settlement ledger for Project Agora is the task ahead," Yoon said. "We need to think not only about using it for fund settlement, but also about ways to link tokenized assets such as government bonds."

He added that linking tokenized government bonds to Agora’s settlement system could make it easier for foreign investors to access South Korea’s government bond market, an outcome he said was also connected to the won’s internationalization.