The Bank of Korea has announced the second phase of its digital currency initiative, Project Han River, to test the usability of tokenized bank deposits. The central bank has added two more commercial lenders to the project, bringing the total number of participating financial institutions to nine. The upcoming phase will transition the technology from retail shop payments to processing mobile application remittances and managing automated public fiscal spending.
The Bank of Korea is moving forward with its plans to update the nation’s digital financial infrastructure. Under the leadership of its new governor, Shin Hyun-song, South Korea’s central bank has initiated the second phase of its central bank digital currency (CBDC) and tokenized deposit research framework. Named Project Han River, the program focuses heavily on integrating programmable, bank-backed digital tokens into everyday transactions.
The central bank has expanded the scale of its project by adding two new commercial lenders Kyongnam Bank and iM Bank. They join the seven original financial institutions involved in the trial, which include Kookmin, Shinhan, Woori, Hana, IBK, Nonghyup, and Busan. This brings the total number of participating commercial banking nodes supporting the network to nine.
The upcoming phase shifts the focus of the technology from retail point-of-sale systems to mobile application remittances. Commercial banks will issue digital representations of traditional bank deposits known as tokenized deposits within a shared system built in collaboration with the central bank. A primary objective for these nine banks is to evaluate if deposit tokens can significantly reduce international transaction and remittance fees for consumers and business entities.
Furthermore, the programming functionality of these digital bank tokens will be integrated into public finances. Working together with the Ministry of Economy and Finance under a regulatory sandbox framework, the central bank plans to test tokenized deposits for government operational spending and fiscal subsidies, such as electric vehicle charging infrastructure funds. By setting pre-defined rules inside the digital currency such as fixed transaction time windows and specific use categories the government expects to automate settlements, lower administrative fees, and prevent the misuse of public funds.
The launch of this new phase follows the completion of an initial real-world trial. The first phase of Project Han River concluded with over 81,000 pre-registered consumer participants executing nearly 115,000 transactions. During that initial phase, consumers used deposit tokens converted from their traditional savings accounts to purchase items at everyday retail chains, such as 7-Eleven, Ediya Coffee, and Kyobo, using QR codes.
While the central bank is aggressively backing CBDCs and tokenized commercial bank deposits, it has notably excluded private, dollar-pegged stablecoins like Tether (USDT) from its primary innovation strategy. Governor Shin highlighted at a European Central Bank forum that private stablecoins carry inherent volatility risks during market shocks. Consequently, the Bank of Korea is favoring a two-tier financial model where the central bank handles the core lifecycle of money, while regulated domestic banks manage consumer distribution.
As the tech experiments progress, the Bank of Korea is simultaneously reviewing the necessary legal adjustments required for a full-scale national rollout. The current goal of the Ministry of Economy and Finance is to successfully migrate approximately one-quarter of national treasury fund processing to digital deposit token networks by 2030. The central bank is working closely with national regulators to build a updated macroprudential framework, ensuring that the introduction of programmable digital money does not cause sudden liquidity instability within the broader commercial banking sector.
