Bank of Korea prepares for live CBDC transactions with 9 banks in September

The Bank of Korea (BOK) is set to begin the second phase of its central bank digital currency (CBDC) pilot in September, involving live transaction testing with nine major banks. These banks include Gyeongnam Bank, iM Bank, and the country’s top three financial institutions: KB Kookmin, Shinhan, Hana, and Woori Financial Group. The BOK will provide the infrastructure for the CBDC, while participating banks will issue and manage deposit tokens, aiming to establish the foundation for a potential digital won commercialization.

This phase marks an expansion from initial piloting to real transaction environments, with the goal of enabling seamless won trading regardless of time or place, according to statements from the BOK and the South Korean government. The project coincides with ongoing initiatives among South Korean banks to prepare stablecoin infrastructures backed by the won, exemplified by Hana Bank's development of systems for issuance, settlement, digital wallets, and anti-money laundering compliance, though it has not yet committed to issuing a stablecoin.

South Korea's CBDC efforts occur amid a global context where only a few countries have fully launched CBDCs; the Bahamas introduced theirs in 2020, Nigeria in 2021, and Jamaica in 2022. According to the Atlantic Council’s CBDC tracker, 41 countries are testing CBDCs, with many others in development or inactive stages. Meanwhile, legislative and regulatory developments are underway domestically, including the Ministry of Economy and Finance’s plan to update national asset laws to classify cryptocurrencies as national assets, reflecting a broader governmental push to integrate blockchain into public finance.

Bank of Korea Governor Shin Hyun-son, appointed in April, has publicly prioritized the CBDC and related deposit tokens. The ongoing pilot and related preparations within the banking sector signal South Korea's intent to advance digital currency adoption within its financial ecosystem, positioning the country alongside other nations exploring blockchain-enabled digital fiat options.