Bank of Korea expands digital won real-world trials

The Bank of Korea has launched phase two of its digital won pilot, expanding to nine commercial banks to test deposit tokens for nationwide payments and government subsidies.

The programme introduces large-scale trials of won-pegged deposit tokens built on a wholesale central bank digital currency layer, aiming to reduce transaction costs for businesses and merchants.

The pilot also enables peer-to-peer transfers and real-world payment use cases, marking a significant step toward broader adoption of digital currency in South Korea.

“Participating banks are actively securing diverse use cases, such as large businesses and small merchants with high public relevance and significant payment fee burdens, focusing on the potential for drastically reduced fees when using digital currency for payments,”

Said Bank of Korea digital currency planning head Kim Dong-sub.

The second phase of Project Hangang adds Kyongnam Bank and iM Bank to the original seven participants, expanding testing capacity and supporting more comprehensive real-world simulations.

A key focus of the trial is reducing reliance on traditional payment systems, particularly credit cards, by offering a lower-cost alternative for both large corporations and small businesses.

The Bank of Korea is also exploring the use of digital currency for government subsidy distribution, with electric vehicle charging incentives expected to be among the first applications.

The initiative comes as South Korea’s Digital Asset Basic Act faces delays due to regulatory disagreements over who should issue KRW-pegged stablecoins.

Further developments include plans to enable payments through AI agents, signalling potential integration between digital currency systems and automated commerce technologies.