BOK, banks at odds over central bank digital currency drive due to cost-sharing

Korea Federation of Banks (KFB) Chairman Cho Yong-byoung, front row fourth from left, Bank of Korea Gov. Rhee Chang-yong, front row fifth from left, and other heads of Korea's commercial and state-run lenders pose before a meeting at the KFB building in Seoul. The meeting was organized by Rhee to exchange views on the rapidly changing domestic and global economic environment, geopolitical tensions and household debt management, support for the real economy and financial market stability. Courtesy of KFB

By Lee Kyung-min

• Published Jun 24, 2025 4:57 PM KST

Commercial and state-run lenders are expressing concerns about the Bank of Korea’s (BOK) central bank digital currency drive (CBDC), characterized by many as the central bank's unilateral push without specifics about shouldering a combined funding cost of 30 billion won ($22 million), market watchers said Tuesday.

Also lacking are a long-term strategy outlining the measures to address suspicious transaction reporting and fraud detection systems. Further spending to fortify IT issues and previously approved business plans remains unresolved.

According to financial industry sources, the member banks of the Korea Federation of Banks (KFB) shared a report ahead of a meeting between BOK Gov. Rhee Chang-yong and the CEOs of 18 commercial banks on Monday.

Central to the concern was project Hangang, the BOK-commissioned digital currency pilot program.

Many said the first phase of the pilot had major shortfalls, and the second phase should proceed with a full review of how the expectations vary between the central bank and the participating lenders.

“We are of the opinion that a centralized body should be established to help us understand the benefit and the significance of the project, instead of asking for our compliance when the commercial viability and the cost-sharing are not coordinated,” an industry official said.

"The costs of infrastructure building and identifying merchants to take part were passed onto lenders. We tried our best to cooperate since it was a central bank drive. However, we find it hard to continue the push given the status quo," the official continued.

The six lenders each reportedly spent between 3 billion won and 6 billion, mostly on marketing and infrastructure building. They are KB Kookmin, Shinhan, Hana, Woori, NH NongHyup and Industrial Bank of Korea (IBK).

The BOK's Rhee offered to share about half the cost in the second phase, but no clear delivery has been made yet.

Repeated complications and issues were left unaddressed, amplifying the lenders’ concerns, according to the official. “CBDC marketing campaigns were frequently reorganized and rescheduled."

Ryoo Sang-dai, the BOK's senior deputy governor, said the pilot phase is subject to policy uncertainties.

“The second phase will require significant investment,” he said during a press conference at the bank headquarters in Seoul Tuesday. “We will decide on the timeline after discussions with both the financial regulators and commercial banks.”

Ryoo said he does not agree with the view that issuing a won-based stablecoin would help curb the use of U.S. dollar-pegged stablecoins. “The urgency to issue a won-based stablecoin is not particularly high, given the increasing use of dollar stablecoins. The U.S. dollar remains a safe asset, so comparing the dollar and the won in this context is not appropriate.”

The central bank maintains the position that financial stability and payment system security should take priority, he said.

“If the won-based stablecoins were to be issued, this should be limited to the banking sectors first to address market disruption concerns. We are advocating for the proper guidelines to be outlined first before everything gets out of hand," Ryoo said. “Banks are subject to strict regulations unlike nonbank financial services providers. This should take collaboration in the months to come.”