Building on the successes—and lessons learned—from the initial phase conducted in early 2025, Project Hangang seeks to fundamentally reshape South Korea’s domestic payment rails and asset-settlement frameworks. By integrating blockchain infrastructure directly into the commercial banking system, the central bank is pioneering a hybrid monetary model that harnesses the speed and programmatic efficiency of distributed ledger technology (DLT) while preserving the stability and regulatory oversight of traditional fiat currency.
Executive Overview: The Architecture of Project Hangang
At its core, Project Hangang is designed to address systemic inefficiencies within South Korea’s legacy interbank settlement and retail payment ecosystems. The initiative leverages a two-tier architectural model:
- The Wholesale Settlement Layer: At the foundational level, the Bank of Korea issues a blockchain-based wholesale CBDC. This digital asset serves exclusively as the ultimate, risk-free settlement asset traded among participating financial institutions.
- The Commercial Issuance Layer: Utilizing the wholesale CBDC as collateral and backing, commercial banks issue their own tokenized bank deposits. These deposit tokens are then distributed to retail and corporate consumers, who can seamlessly deploy them for everyday transactions, merchant payments, and peer-to-peer transfers.
This structure allows the central bank to maintain ultimate authority over monetary stability while empowering commercial banks to innovate at the consumer interface. Rather than replacing commercial bank money, Project Hangang integrates it into a unified, programmable ledger designed to drastically reduce transaction friction, eliminate settlement delays, and lower operational overheads for financial intermediaries.
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BANK OF KOREA (Wholesale CBDC Layer)
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[Blockchain-Based Settlement & Collateral]
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PARTICIPATING COMMERCIAL & REGIONAL BANKS
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[Tokenized Bank Deposits Issued to Public]
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CONSUMERS, MERCHANTS & GOVERNMENT
(Everyday Payments, P2P, Subsidy Disbursements)
+-------------------------------------------------------------+Strategic Objectives of Phase Two
While the inaugural phase of Project Hangang focused heavily on stress-testing foundational payment infrastructure, core ledger stability, and basic interoperability, Phase Two represents a pivotal transition toward commercialization.
Key strategic objectives for the upcoming rollout include:
- Broadened Banking Participation: Expanding the consortium from seven to nine major financial institutions, thereby improving geographic and demographic reach.
- Advanced Functionality: Introducing sophisticated user-experience upgrades, including peer-to-peer (P2P) transfers, biometric authentication protocols, and automated deposit token logic.
- Government Integration: Testing real-world fiscal policy execution by routing government subsidies directly through tokenized commercial bank deposits.
- Asset Tokenization Trials: Exploring the integration of tokenized government bonds into the settlement workflow, bridging the gap between monetary and capital markets.
Detailed Chronology: From Concept to Commercialization
The evolution of South Korea’s digital currency strategy has been methodical, deliberate, and deeply rooted in empirical research. Understanding the trajectory of Project Hangang requires examining the key milestones that have defined the nation’s digital asset journey.
Pre-2025: Foundational Research and Interoperability Studies
Long before Project Hangang was officially branded, the Bank of Korea spent years conducting rigorous technical simulations. These early trials evaluated the feasibility of retail CBDCs, distributed ledger performance benchmarks, privacy-preserving cryptographic techniques (such as zero-knowledge proofs), and cross-border payment efficiencies.
As global central banks increasingly pivoted away from pure retail CBDC models—fearing disintermediation of the commercial banking sector and deposit runs during financial panics—the BOK shifted its strategic focus toward a wholesale-retail hybrid model. This paved the way for the conceptualization of Project Hangang.
Phase One: April – June 2025
The first formal operational phase of Project Hangang kicked off in April 2025 and ran through June 2025. Designed primarily as a proof-of-concept for underlying payment infrastructure, Phase One operated within a controlled, sandbox-like environment involving seven major commercial banks.
- User Adoption: Approximately 81,000 retail participants were onboarded onto the pilot network.
- Transaction Volume: Over the course of the three-month test window, participants completed a combined 114,880 transactions utilizing commercial bank-issued deposit tokens.
- Infrastructure Validation: BOK engineers monitored latency, consensus mechanisms, node synchronization, and system resilience under peak load conditions.
The results of Phase One demonstrated that DLT-based settlement layers could successfully integrate with existing banking APIs without causing operational bottlenecks or ledger fragmentation. Encouraged by these metrics, the central bank immediately began drafting the parameters for a more expansive secondary phase.
Phase Two: September 2025 (Projected Launch) & Beyond
Scheduled to launch as early as September, Phase Two marks the shift from isolated sandbox experimentation to real-world utility testing. By scaling the participant network, introducing complex fiscal disbursement mechanisms, and deploying advanced consumer-facing technologies, the BOK aims to evaluate how tokenized money behaves under conditions that closely mirror a fully digitalized national economy.
Supporting Context & Metrics: Analyzing the Participants and Technology
To fully appreciate the scope of Phase Two, it is necessary to examine the composition of the banking consortium and the specific technological features being deployed.
Expanding the Banking Consortium
During Phase One, seven of South Korea’s premier financial institutions spearheaded the initiative. For Phase Two, the BOK has announced the inclusion of two prominent regional lenders: Kyongnam Bank and iM Bank (formerly DGB Daegu Bank).
| Metric / Feature | Phase One (Apr–Jun 2025) | Phase Two (Projected Sept 2025) |
|---|---|---|
| Participating Banks | 7 Commercial Banks | 9 Banks (Added Kyongnam Bank & iM Bank) |
| Active Participants | ~81,000 Users | Expanded Retail & Corporate Base |
| Total Transactions | 114,880 Completed | Scaled Volume Test |
| Core Focus | Infrastructure & Basic Payments | Commercialization & Subsidy Disbursals |
| Key Features | Deposit Token Issuance | P2P Transfers, Biometrics, Tokenized Bonds |
The inclusion of regional lenders is strategically vital. It ensures that the benefits of the wholesale CBDC infrastructure are not concentrated solely within Seoul-based megabanks, but extend to provincial economies, SMEs, and local municipalities.
Technological Upgrades in Phase Two
Phase Two introduces several highly anticipated technological features designed to elevate tokenized deposits from simple digital cash replacements to smart-contract-enabled financial instruments:
- Peer-to-Peer (P2P) Transfers: Unlike Phase One, which primarily tested merchant-to-consumer and business-to-business clearing, Phase Two empowers everyday users to transfer deposit tokens directly to one another instantaneously, matching the convenience of current consumer fintech applications like Toss or KakaoPay.
- Biometric Authentication: Security is paramount in digital currency deployment. Phase Two integrates advanced biometric verification layers (facial recognition and fingerprint authorization) directly into transaction execution pathways to minimize fraud and unauthorized access.
- Automated Deposit Token Features: Leveraging programmable logic, the pilot will test conditional payments. For instance, funds can be programmed to release automatically only when specific milestones are met, reducing escrow costs and eliminating trade settlement disputes.
- Tokenized Government Bonds: In coordination with broader modernization initiatives, the pilot will begin experimenting with tokenized government bonds as eligible collateral or settlement assets within the DLT framework. This bridges the gap between public debt markets and digital currency settlement.
Official Statements and Regulatory Perspectives
While central banks globally have maintained a cautious posture regarding digital assets, South Korea’s monetary authorities have adopted a pragmatic, innovation-forward approach driven by rigorous empirical testing.
Senior officials at the Bank of Korea have repeatedly emphasized that Project Hangang is not designed to disrupt the existing financial order, but rather to future-proof South Korea’s monetary infrastructure against an increasingly digitized global economy.
In recent policy briefs, BOK research divisions noted that the rise of global stablecoins and decentralized finance (DeFi) necessitates a robust, state-backed digital settlement alternative. By providing a secure foundation of trust through wholesale CBDCs, the central bank ensures that commercial bank money remains the cornerstone of the domestic economy, even as payment rails evolve.
Simultaneously, financial regulators—including the Financial Services Commission (FSC)—are closely monitoring the pilot to ensure strict adherence to anti-money laundering (AML) and know-your-customer (KYC) frameworks. The integration of commercial banks into the issuance layer guarantees that consumer funds remain protected under existing banking regulations, deposit insurance schemes, and consumer protection laws.
Future Outlook: Implications for South Korea and the Global Financial System
As Project Hangang progresses into its second phase, its implications extend far beyond South Korea’s borders.
The Domestic Landscape
If Phase Two successfully demonstrates that tokenized bank deposits can efficiently handle government subsidy disbursements, peer-to-peer transfers, and bond settlements at scale, South Korea will be positioned at the vanguard of central bank digital innovation. The lessons learned from integrating regional lenders like Kyongnam Bank and iM Bank will provide a roadmap for nationwide rollout toward the latter half of the decade.
Long-term, the successful commercialization of Project Hangang could lead to:
- Drastically Reduced Settlement Times: Moving from multi-day batch settlements to instantaneous atomic settlement.
- Lower Merchant Fees: Disintermediating legacy card networks and payment gateways, thereby reducing operational overhead for small businesses.
- Enhanced Financial Inclusion: Streamlining onboarding and payment verification for underbanked populations through regional bank integration.
The Global CBDC Race
Globally, central banks are watching the BOK’s hybrid wholesale-retail model with intense interest. While nations like China advance their retail e-CNY project, and various Western economies debate the privacy implications of central bank-issued retail wallets, South Korea’s collaborative model—relying on commercial banks to interface with the public while the central bank secures the backbone—offers a balanced blueprint.
Should Project Hangang achieve full commercial deployment in the coming years, it could serve as a foundational template for cross-border interoperability initiatives. By connecting wholesale CBDC ledgers across international jurisdictions, central banks could eventually revolutionize global trade finance and cross-border remittances, slashing costs and settlement risks worldwide.
For now, all eyes remain on Seoul as the Bank of Korea prepares to flip the switch on Phase Two this September, setting a new benchmark for the future of money.
