The Bank of Korea has added Kyongnam Bank and iM Bank to Project Hangang, its digital won pilot, moving the initiative into a new phase that emphasizes real-world deployment at considerable scale. Project Hangang aims to test the viability and economic impact of a central bank digital currency (CBDC) in South Korea. The Bank of Korea, the nation’s central bank founded in 1950, is tasked with maintaining price stability and overseeing monetary policy, and is now positioning itself at the forefront of digital currency innovation through this pilot.
Expanded Testing: From Technology To Real-World Use
Project Hangang’s first phase centered on building and validating the digital won’s technical foundation. With phase two now underway, the focus shifts to operational breadth and the integration of digital currency into everyday activities. This phase aims to examine the digital won’s practical applications in national finance and payments systems, placing it in real-world environments rather than restricted lab conditions.
Distribution, Fees, And Peer-To-Peer Transfers
A central element in the new phase is the distribution of 110 trillion won in government subsidies via digital deposit tokens. The Bank of Korea intends to boost transparency and control in public expenditure, ensuring such funds are allocated directly to stated purposes and not misapplied. Programmable digital money brings this conditional logic, offering a level of oversight and security not available with regular banking transfers.
Lowering transaction costs is another key target. The pilot investigates whether the digital won can significantly reduce payment fees currently borne by merchants. For large corporations and especially for small businesses, card processing costs erode profit margins, and a digital alternative presents the opportunity for more favorable economics.
Peer-to-peer transfer capability, not fully realized in the initial pilot, is also set for evaluation. This feature’s introduction moves the digital won closer toward practical use for consumers and daily transactions, rather than being confined to institutional settlements.
Looking further ahead, the pilot program will explore compatibility with AI agents. These autonomous entities could independently complete purchases using digital won, marking an early step toward syncing emerging technology with financial infrastructure. The commercial impact of this innovation remains unclear, but the Bank of Korea aims to position the digital won as adaptable to future payment models.
Participant Base Grows And Demographics Diversify
With Kyongnam Bank and iM Bank joining seven major counterparts—KB Kookmin, Shinhan, Woori, Hana, NH Nonghyup, IBK Industrial, and BNK Busan—the digital won pilot now covers nine key financial institutions. This extended group enables interoperability testing and supports analysis across diverse customer bases, as regional banks often serve segments overlooked by major institutions. The project involves around 100,000 selected participants and will continue live trials throughout the first half of 2026.
The inclusion of regional lenders deepens the pilot’s reach and provides richer transactional data, as these banks represent customers with distinct needs and spending habits. Their involvement enhances the integrity of the trial by reflecting variations in payment practices across different geographies and demographics.
Regulatory Uncertainty Drives Strategic Momentum
Project Hangang’s rapid development is influenced by South Korea’s current regulatory environment. The Digital Asset Basic Act (DABA), which seeks to establish guidelines for digital currency and stablecoin issuance, has encountered delays amid legislative disagreements. This extended timeline has left a gap in the digital asset regulatory structure.
In response, the Bank of Korea is quickly advancing its model of bank-issued deposit tokens on a wholesale CBDC platform as a regulated and controlled alternative to private stablecoins. By filling this regulatory void proactively, the central bank effectively positions state-backed digital currency as the centerpiece of Korea’s future digital payments architecture, regardless of subsequent developments in stablecoin regulation.
