The Bank of Korea has begun the second phase of the Hangang project, expanding its digital won program to nine banks and, for the first time, using central bank digital currency (CBDC) linked deposit tokens for real government support payments.
summary
- The second phase of the Bank of Korea’s Hangang project expands the wholesale central bank digital currency and deposit token from seven to nine banks and offers direct government support disbursement as a basic test case.
- New features such as biometric approvals, P2P wallet transfers and automatic top-ups are aimed at fixing the weak engagement of the first phase, when only about 80,000 out of 100,000 invited users opened wallets and the volume remained below 700 million won despite spending 30-35 billion won on infrastructure.
- Seoul positions deposit tokens as an “intermediate stage between a central bank digital currency and stablecoins,” tying the pilot program to a potential 110 trillion won support stream and future AI-powered automatic payments rather than rushing to issue a fully retail CBDC.
Bank of Korea (BOK) officially It launched the second phase of Project Hangang on Wednesday, its flagship initiative to build a blockchain-based payments and settlements infrastructure using wholesale central bank digital currency (CBDC) and commercial bank deposit tokens. This expansion represents a pivotal step forward for South Korea’s digital currency ambitions, as the project expands from seven to nine participating commercial banks and introduces direct government support disbursement for the first time.
The second phase, which was officially named “Hangang Project Phase 2”, He adds Kyongnam Bank and iM Bank to the original seven institutions – KB Kookmin, Shinhan, Woori, Hana, NH Nonghyup, IBK Industrial, and BNK Busan Bank. The project is being implemented in conjunction with the Financial Services Commission and the Financial Supervision Service, and covers real-scenario testing of deposit tokens across two critical use cases: distribution of government support and nationwide consumer payment and transfer services.
The first phase of the Hangang project, which lasted for approximately three months starting in April 2025, involved up to 100,000 participants and recorded 118,000 payment test transactions, confirming that the deposit-based payment and settlement system can operate stably in a live environment. However, the pilot project revealed significant frictions: while 100,000 citizens were invited to participate, only about 80,000 citizens opened digital wallets, and the total volume of payments amounted to only 692.46 million won – modest numbers that prompted banks, which collectively spent approximately 30 to 35 billion won to build basic infrastructure, to raise concerns about the feasibility of commercialization.
The Bank of Korea addressed these gaps directly in the second phase. New features include biometric authentication via fingerprint for payment approval, direct peer-to-peer transfers between digital wallets, and an auto-top-up function that transfers funds from a linked bank account into deposit tokens when the wallet balance gets low. The Bank of Korea framed the improvements as targeted steps toward parity in ease of use with existing electronic payment systems.
One of the most important additions in the second phase is the integration of government support disbursement. The South Korean government distributes huge sums of money through social welfare programs – and a representative of the Bank of Korea noted that the Hangang Project is designed to enhance financial efficiency by reducing misuse and reducing administrative costs associated with the current system of credit cards, locally issued vouchers, and bank accounts. The government is exploring allocating part of its $499 billion budget through central bank digital currency-linked distribution infrastructure, making the subsidy trial a test case with implications far beyond retail payments.
The Bank of Korea was careful to define the project’s ambitions modestly. In its announcement, it described the digital currency being tested as “an intermediate stage between central bank digital currencies (CBDC) and stablecoins,” and stressed that the Hangang project does not depend on the immediate introduction of a full retail CBDC, but rather is a real transactional test of how public financial infrastructure works in a digital environment. For commercial banks, this will be “an opportunity to try to use them in advance in preparation for possible institutionalization in the future,” the BOK added.
Real transactions are planned to be followed on a large scale with all nine banks second Halfway through 2026, with a stated goal of lowering payment fees for small business owners and building financial infrastructure linked to new industries – including automatic payments based on artificial intelligence. LG CNS, which built the core technical infrastructure for the first phase, remains an essential systems partner.
The launch comes weeks after Bank of Korea It separately published a report in February 2026 urging regulators to restrict the early issuance of won-backed stablecoins to licensed commercial banks, citing money laundering and financial stability risks — a position that reinforces Seoul’s preference for a single currency. Controlleda bank-led path to digital currency adoption rather than the open access model seen in some other jurisdictions.
