The Bank of Korea (BOK) has announced the launch of Project Hangang, a three-month pilot programme to test the use of a central bank digital currency (CBDC) in real-world transactions. Scheduled to run from April to June, the initiative will allow 100,000 participants to convert their bank deposits into digital tokens for everyday payments. Unlike cryptocurrencies that operate on decentralised networks, CBDCs are issued and regulated by central banks. The pilot aims to assess the feasibility and functionality of a state-backed digital currency in South Korea’s financial ecosystem.
Participants will make transactions using QR code payments, mirroring existing mobile payment methods. HBowever, instead of drawing from a traditional bank balance, payments will be processed through deposit tokens, a digital representation of money backed by the BOK. Users will convert funds from their bank accounts into deposit tokens, similar to how debit card transactions directly deduct funds. For most participants, the process will feel familiar, much like using Kakao Pay or online credit card transactions.
Each participant will have a deposit token limit of 1 million won (US$689), with a total spending cap of 5 million won. Users can convert their bank deposits into digital tokens multiple times within these limits. Employees at participating banks have already been testing the system, and the BOK has hinted at the possibility of lifting restrictions if the trial proves successful.
