The Bank of Korea expanded the digital won pilot project to nine banks and launched the second phase of Project Han River, which will use CBDC-linked deposit tokens to pay actual government subsidies for the first time.
summation
- BOK’s Project Han River Phase 2 will expand the wholesale CBDC and deposit-token pilot from seven to nine banks and introduce real-time government subsidy payments as a key test case.
- New features such as biometric authentication, peer-to-peer wallet transfers and automatic recharge aim to fix weak engagement in the first phase, where about 80,000 out of 100,000 invited users opened wallets and transaction volume remained below KRW 700 million despite infrastructure spending of KRW 30-35 billion.
- The Seoul Metropolitan Government is positioning the deposit token as an “intermediate step between CBDC and stablecoins,” linking the pilot to a potential KRW 110 trillion subsidy stream and future AI-based automated payments rather than rushing into a full retail CBDC.
The Bank of Korea officially launched the second phase of the Han River Project on Wednesday, a flagship project to build a blockchain-based payment infrastructure using central bank digital currency (CBDC) and commercial bank deposit tokens. The expansion marks a pivotal step towards South Korea’s digital currency ambitions, expanding the project from seven to nine participating commercial banks and introducing real-time government subsidy payments for the first time.
In the second stage, officially called ‘Project Han River Stage 2’, Kyongnam Bank and iM Bank will be added to the existing seven institutions (KB Kookmin, Shinhan, Woori, Hana, NH Nonghyup, IBK Industrial, and BNK Busan Bank). The project is being conducted in collaboration with the Financial Services Commission and the Financial Supervisory Service and covers real-world scenario testing of deposit tokens across two important use cases: government subsidy distribution and nationwide consumer payment and remittance services.
In the first phase of Project Han River, which lasted for about three months starting in April 2025, up to 100,000 participants participated and 118,000 payment test transactions were recorded, verifying that the deposit token-based payment system can operate stably in a live environment. However, although 100,000 citizens participated in the pilot project, only 80,000 people actually opened a digital wallet, and the total payment amount was only 692.46 million won, causing considerable friction, with banks that invested a total of 30 to 35 billion won in building the infrastructure raising concerns about the feasibility of commercialization.
The Bank of Korea directly addressed this gap in Phase 2. New features include biometric authentication via fingerprint to authorize payments, direct peer-to-peer transfers between digital wallets, and an auto-recharge feature that converts funds from linked bank accounts into deposit tokens when wallet balances are low. The Bank of Korea frames the improvements as meaningful steps toward usability parity with existing electronic payment systems.
One of the most important additions in Phase 2 is the integration of government subsidy payments. The Korean government distributes huge amounts of money through social welfare programs. The Bank of Korea representative noted that the Han River Project is designed to increase financial efficiency by reducing misuse and reducing administrative costs associated with the current credit card, locally issued voucher and bank account systems. The government is exploring how to allocate part of its $499 billion budget through CBDCs and linked distribution infrastructure, making the subsidy pilot a test case with implications beyond retail payments.
BOK was careful to properly frame the project’s ambitions. The announcement described the digital currency being tested as “an intermediate step between a CBDC and a stablecoin,” and emphasized that Project Han River is not premised on the immediate introduction of a full-fledged retail CBDC, but rather a real-world transactional test of how public financial infrastructure can operate in a digital environment. In the case of commercial banks, he added, “This is an opportunity to take advantage of it in advance in preparation for the possibility of institutionalization in the future.”
A large-scale follow-up actual transaction with all nine banks is scheduled in the second half of 2026 with the goal of reducing payment fees for small business owners and establishing financial infrastructure linked to new industries, such as AI-based automatic payments. LG CNS, which established the basic technology infrastructure for phase 1, remains a key system partner.
The launch comes just weeks after the Bank of Korea issued a separate report urging regulators to limit the early issuance of won-backed stablecoins in February 2026, citing money laundering and financial stability risks. This is a position that reinforces Korea’s preference for a controlled, bank-led path to digital currency adoption rather than the open access model seen in some other jurisdictions.