South Korea's central bank is expanding its CBDC deposit token pilot, Project Hangang, with more banks and a new test tied to government spending.
Korea Crypto News
The Bank of Korea is moving its central bank digital currency, or CBDC, project further toward daily use. The bank has added more lenders to its testing program and is preparing a separate trial that uses deposit tokens for government payments.
The pilot is called Project Hangang. It tests bank-issued deposit tokens backed by central bank infrastructure to see whether the system can support government subsidy payments and everyday transfers nationwide.
The Bank of Korea began the second phase of the pilot on March 18, 2026, expanding to nine commercial banks after adding Kyongnam Bank and iM Bank to the seven lenders that took part in the first round.
The new phase tests large-scale, won-pegged deposit tokens built on a wholesale CBDC layer, aiming to cut transaction costs for both large companies and small merchants that pay credit card fees.
Deposit Token Pilot Expands to More Banks
Under Project Hangang, a wholesale CBDC issued to financial institutions works alongside blockchain-based deposit tokens distributed to users, combining traditional banking with newer digital payment tools. Kim Dong-seop, who leads the Bank of Korea's Digital Currency Planning Team, described the setup as “a middle ground or a compromise between a CBDC and a stablecoin.”
The central bank is also paying for outside help to push the project toward commercial use. Its Digital Currency Division commissioned an external consulting service with a budget of 1.7 billion won, or about $1.26 million, to support the second phase of testing.
South Korea's new central bank governor has backed the project publicly. Shin Hyun-song, who took office in April 2026, said in his first address that the central bank would advance the second phase of Project Hangang and continue working with international partners through the Bank for International Settlements' Agora Project. He said the work would help raise the standing of the Korean Digital Won in digital payments, and he did not mention stablecoins in the speech.
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Government Spending Tests Take Shape
Apart from the bank pilots, South Korea is preparing a separate test for government money. The country's finance ministry is preparing to test blockchain-based payments for selected government expenses as part of a regulatory sandbox exploring distributed ledger technology in public finance.
The pilot will use tokenized deposits to carry out government operational spending, with a full rollout targeted for the fourth quarter of 2026. The first phase will launch in Sejong City and will include conditions such as limits on timing and spending categories. Officials can program the tokens to work only during set hours, such as nine in the morning to six at night, or only within certain industries such as transportation. This feature aims to cut down on misuse of public funds and reduce the need for audits tied to off-hours spending.
The system also seeks to reduce costs. Removing financial intermediaries such as card networks would let merchants skip the commission fee, usually one to three percent, that normally goes to card companies when a customer pays by credit card.
A separate Bank of Korea push has tied deposit tokens to a much larger sum of money. An upcoming test would use deposit tokens to help distribute 110 trillion won, or about $79.4 billion, in government subsidies, according to a report from Yonhap News.
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