BOK to recruit 100,000 participants for digital currency experiment

Headquarters of the Bank of Korea in Seoul / AFP-Yonhap

The Bank of Korea (BOK) will launch a pilot for real-world transactions using its central bank digital currency (CBDC) in April, the central bank announced Tuesday. Around 100,000 participants will have the opportunity to convert their bank deposits into digital tokens for everyday transactions.

The BOK and seven banks — KB Kookmin, Shinhan, Hana, Woori, NH NongHyup, BNK Busan Bank and Industrial Bank of Korea — will conduct a three-month real-world transaction experiment using the central bank's digital currency.

Named Project Hangang, the pilot will run from early April to the end of June, providing a period for assessing the practical application of CBDC in everyday transactions.

Once the BOK issues its CBDC, banks will be able to issue corresponding payment tokens. Individual participants can then convert cash from their bank accounts into deposit tokens and use them at designated merchants.

Payments will be processed via QR codes within the respective banking apps. The holding limit for deposit tokens per person will be set at 1 million won ($689.23), with a total transaction limit of 5 million won during the test period.

Through the pilot, the BOK and the banking industry will evaluate whether a CBDC can function as a feasible alternative to the traditional transaction and settlement process, in which banks utilize reserves derived from deposits stored at the central bank.

The BOK plans to issue a public notice later this month to recruit participants for the pilot. A BOK official said, "Deposit token payments will enable merchants to receive real-time settlements. By minimizing intermediaries in the payment process, transaction fees are expected to be reduced."