The Bank of Korea (BOK) said on the 18th that starting in the second half of this year it will begin a live pilot using deposit tokens for convenience store payments and peer-to-peer transfers. This will fully launch phase two of the "Project Hangang" initiative to build a digital currency infrastructure that was pursued last year. Participating institutions and use cases will also be expanded compared with before.
According to the Bank of Korea (BOK), the first live test, conducted from Apr. to Jun. last year, verified whether the system operated stably across the entire process from issuance of deposit tokens to circulation and redemption. About 80,000 people took part and more than 110,000 transactions were made, and participants were able to use deposit tokens at convenience stores, marts, cafes, bookstores, and delivery apps.
Deposit tokens convert bank deposits into tokens based on Blockchain, and users can hold them in an e-wallet within a bank app and use them for payments or transfers. It is a method of converting money in an existing account into token form for use.
In this second phase, peer-to-peer transfer functionality will be newly introduced. Users will be able to send funds directly to others via deposit tokens, and token movements between banks will also occur freely. Payment convenience will also improve. Simple payments using biometric authentication will be introduced, and an automatic conversion function between deposits and tokens will be added so that payments can be made without separate procedures even when balances are insufficient.
Use cases will also become more diverse. In the first-phase experiment, only one enterprise per category—such as a convenience store, bookstore, or online shopping—was selected for testing, but in the second round, a wider variety of enterprises will be secured as use cases, the Bank of Korea (BOK) said. A Bank of Korea (BOK) official said, "We will prepare so that not only large enterprises with a heavy burden of payment fees but also small business owners are included."
Participating banks have also increased. In addition to Kookmin, Shinhan, Woori, Hana, IBK, NongHyup, and Busan Bank, which took part in phase one, Kyongnam Bank and IM Bank will newly participate in this experiment.
The Bank of Korea (BOK) plans to push measures to use deposit tokens for future government subsidy disbursements as well. In consultation with the government, it first plans within the first half of this year to pay subsidies in deposit tokens to enterprises that have built electric vehicle charging infrastructure. In addition, it will conduct parallel research on whether deposit tokens can be used as a means of payment in the digital asset sector, including AI-based automatic payments and tokenized stock and bond transactions.
The Bank of Korea (BOK) said, "Through this second-phase project, after examining commercialization potential, we plan to fully introduce digital currency infrastructure following institutional improvements and system enhancements," adding, "Ultimately, we will establish a new low-cost, high-efficiency means of payment and support the development of the domestic digital finance ecosystem."