Bank of Korea's Hangang CBDC Pilot

The Bank of Korea (BOK) is launching a significant central bank digital currency (CBDC) pilot program called "Digital Test Project Hangang" in April. This three-month initiative involves seven major South Korean banks: KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup, IBK Industrial Bank of Korea, and BNK Busan.

Hangang CBDC Pilot: Key Details

The Hangang project aims to assess the efficiency and practicality of a CBDC-based payment system. Up to 100,000 citizens will participate, exchanging bank deposits for "deposit tokens" used at various retail locations, including supermarkets, online stores, and convenience stores. The BOK will closely monitor real-world transactions and assess the potential for reduced transaction fees by minimizing intermediary institutions.

Benefits and Objectives

• Real-time settlement: Merchants receive funds instantly.
• Reduced transaction fees: Fewer intermediaries mean lower costs.
• Testing CBDC feasibility: Evaluating the practicality of CBDCs in everyday transactions.

If successful, this model could pave the way for a broader rollout of a BOK-issued institutional digital currency, with participating banks issuing linked tokens for consumer use. The BOK plans a public announcement later this month to recruit participants.

BOK's Stance on Bitcoin Reserves

Separately, the BOK has ruled out adopting a strategic Bitcoin reserve, citing the cryptocurrency's volatility and inherent risks. This contrasts with speculation surrounding North Korea's potential Bitcoin holdings.

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