The Bank of Korea is expanding its central bank digital currency (CBDC) pilot with half a million users

The Bank of South Korea has been running a central bank digital currency, or CBDC, on a trial basis for three months last year. 81,000 people opened their wallets, but only 42% actually spent anything.

The next phase of central bank digital currency (CBDC) pushes begins in September — with nine banks participating, up to 500,000 users spending tokens, and real government money at stake this time.

The central bank announced the expansion Project even— the CBDC initiative (a government-issued version of paper that relies on blockchain) — on Monday, Yonhap News Agency reported. “From the second phase, we will lay the foundation for commercialization,” a Bank of Korea official said. Yonhap.

The first phase ran from April to June 2025 with seven banks and 12,000 merchants generating 114,880 transactions. According to review before HRF CBDC TrackingThe banks have collectively allocated about 30-35 billion won to build infrastructure to achieve this result.

The second stage addresses the problem of participation through functions that resemble actual banking services. New features include biometric fingerprint approvals, person-to-person wallet transfers, automatic top-ups (your linked bank account converts funds into deposit tokens automatically when the balance gets low), automatic recurring payments, cash receipt generation, and interest payments.

For the first time, the pilot will also test government support payments using programmable tokens.

The Bank of Korea issues a wholesale central bank digital currency, a digital currency used only between financial institutions to settle transactions behind the scenes, and not something that ordinary people directly own. Commercial banks then create deposit tokens (a blockchain-based version of the money already in your bank account) that consumers and merchants use for actual payments. Kim Dong-seop, head of the bank’s digital currency planning team, It’s called design “A compromise between a central bank digital currency (CBDC) and a stablecoin.”

For everyday users, this architecture could eventually mean receiving government benefits directly in a digital wallet rather than waiting for a voucher or check. For small businesses and retailers, the test will measure whether token deposit payments can reduce the interchange fees that card networks charge on each transaction — a cost that quickly compounds for high-volume merchants.

The second phase will power programmable deposit tokens with built-in spending rules: restricted funds for permitted purposes, vendors and time windows, replacing the paper trail of manual audits and reducing fraud at the point of disbursement.

In other words, this implementation gives the Bank of Korea broader control over how citizens spend money provided by the government for a specific purpose.

The original seven banks – KB Kookmin, Shinhan, Hana, Woori, Nonghyup, Industrial Bank of Korea and BNK Busan – are joined by Gyeongnam Bank and IM Bank. The pilot will run open-ended and not with a fixed closing date.

South Korea’s new Bank of Korea governor, Shin Hyun-sung, made the Han Jang project a major focus in his first policy speech after taking office in April 2026. Meanwhile, Hana Bank began designing systems for a won-backed stablecoin — a privately issued digital token 1:1 pegged to the Korean won — ahead of the legislation that was at the heart of the Korean currency. Stablecoin discussion In Seoul since mid-2025. The Ministry of Economy and Finance also announced plans to update the 76-year-old National Assets Law to classify cryptocurrencies as national assets.

However, central bank digital currencies are not without controversy. The same programmability that makes deposit tokens attractive to regulators is exactly what critics worry about. Rules that block government funds to specific vendors can easily be expanded beyond subsidies, such as expiring balances, spending category restrictions, or wallet freezes without a court order. Unlike cash, every central bank digital currency (CBDC) transaction is recorded in a ledger that the central bank and its partners can read.

Civil liberties organizations have pointed to this as a structural problem with CBDCs as a category, not just the South Korean version. China’s digital yuan has already been rolled out with expiration dates for some stimulus payments, with Beijing positioning the policy as an anti-hoarding policy, and critics calling it financial coercion. Researchers in Lawfare They warn that China’s electronic yuan could set a global precedent for state-controlled financial surveillance. The concern is the same no matter who runs the system: programmable money is money with conditions attached, and those conditions can always be expanded.

Meanwhile, the United States is heading in the other direction. the Four-year ban on CBDC version It became law On July 11 – The Pathway to 21st Century Housing Act went into effect without President Donald Trump’s signature when the 10-day constitutional deadline expired, after Trump refused to sign it due to demands unrelated to voting legislation.