The Bank of Korea is preparing to advance its wholesale central bank digital currency initiative with the second phase of Project Hangang expected to launch as early as September, according to reporting from Yonhap News. The expansion will bring two additional regional banks into the pilot program, introduce new payment capabilities, and test government subsidy disbursements through tokenized bank deposits, marking a significant step toward commercializing the CBDC framework.
Project Hangang operates on a blockchain-based wholesale CBDC issued by the central bank that serves as the settlement asset for deposit tokens created by commercial banks. This structure allows consumers to use bank-issued tokens for everyday payments while maintaining the central bank’s control over the underlying monetary system. The model represents an innovative approach to CBDC implementation that balances retail accessibility with wholesale efficiency.
The second phase will expand participation from seven to nine banks, with regional lenders Kyongnam Bank and iM Bank joining the existing consortium of participants. This follows a pattern seen in related coverage of tokenized deposit pilots with major financial institutions, demonstrating growing institutional confidence in blockchain-based settlement systems. The expanded participant base signals the Bank of Korea’s commitment to building a robust ecosystem around its CBDC infrastructure.
The first phase of Project Hangang, conducted from April to June 2025, focused primarily on establishing payment infrastructure and validating the technical framework. The pilot attracted approximately 81,000 participants who completed 114,880 transactions using deposit tokens, providing valuable data on user behavior and system performance. These metrics demonstrated sufficient demand and technical viability to justify moving forward with the next stage of development.
See also: South Korea Sets 2027 Pilot for Tokenized Government Bonds on Wholesale CBDC
The upcoming second phase will shift focus toward commercialization and real-world application scenarios. New features under development include peer-to-peer transfers, biometric authentication, and automated deposit token transfers. These additions address practical consumer needs and enhance security measures, making the system more competitive with existing payment solutions. Participating banks will also be permitted to bring merchants with partnership agreements into the program, expanding the merchant acceptance network.
Government subsidy disbursements represent one of the most significant use cases being tested in the second phase. By distributing subsidies through tokenized bank deposits on the wholesale CBDC, South Korea can streamline the payment process while maintaining transparency and reducing administrative overhead. This application demonstrates how CBDCs can improve government financial operations beyond traditional monetary policy functions.
The expansion to nine banks provides a more representative sample of South Korea’s banking sector and tests interoperability across a larger network. This broader participation helps identify potential scalability challenges and operational inefficiencies before any potential wider rollout. The involvement of regional banks ensures that the pilot captures perspectives from institutions serving different market segments and geographic areas.
South Korea’s CBDC efforts align with broader global trends in central bank digital currency development. According to data from the Bank for International Settlements, over 90 percent of central banks are exploring CBDC technology, with many moving from research phases into pilot programs similar to Project Hangang. South Korea’s approach of using wholesale CBDCs with tokenized deposits offers a middle ground between full retail CBDC implementation and traditional banking infrastructure.
See also: SWIFT Launches Blockchain Ledger, Pilots Tokenized Deposits With 17 Major Banks
The timing of the September launch comes as South Korea continues to position itself as a leader in blockchain and digital asset innovation. The country has previously demonstrated commitment to tokenization initiatives, including plans for tokenized government bonds on wholesale CBDC platforms. These coordinated efforts suggest a comprehensive strategy to modernize South Korea’s financial infrastructure through blockchain technology.
The Bank of Korea has not yet released an official announcement confirming the September timeline, though the Yonhap News report indicates strong internal planning toward that target date. Participants in the pilot program are likely preparing systems and staff training to accommodate the expanded feature set and merchant integration requirements. The transition from phase one to phase two will provide important lessons applicable to other central banks considering similar CBDC implementations.
Success in the second phase could accelerate the timeline for broader CBDC adoption in South Korea and influence policy decisions at other central banks. The focus on practical applications like government subsidies and merchant payments demonstrates that CBDC development is moving beyond theoretical frameworks into tangible use cases with measurable economic benefits.
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