Main Points:
- Project Hangang enlists 100,000 participants and over 70,000 merchants, including 7‑Eleven, to test retail CBDC payments from April 1 to June 30, 2025.
- A 10% discount on all CBDC payments serves as an incentive to drive consumer adoption and generate real‑world transaction data.
- Participants can convert up to KRW 5 million of bank deposits into tokenized digital won, with tokens interchangeable at par with the Korean won.
- Major banks—Kookmin, Shinhan, Hana, Woori, NH, IBK, and Busan—facilitate on‑ramps and off‑ramps between bank deposits and CBDC tokens.
- The pilot leverages distributed‑ledger technology to tokenize deposits while preserving central‑bank oversight and regulatory compliance.
- Globally, 44 CBDC pilots are underway, with full retail launches in the Bahamas, Jamaica, and Nigeria, highlighting a broader shift toward digital public money.
- Key challenges include privacy concerns, technological resilience, interoperability, and consumer education before full‑scale issuance.
- Lessons from Hangang will inform the Bank of Korea’s design choices, regulatory frameworks, and potential launch of a digital won by the end of 2026.
Introduction to Project Hangang
South Korea’s central bank, the Bank of Korea (BOK), has embarked on “Project Hangang,” a three‑month pilot to evaluate the feasibility of a retail central bank digital currency (CBDC) in everyday commerce. Running from April 1 through June 30, 2025, the initiative invites 100,000 randomly selected individuals and over 70,000 merchants—ranging from convenience store chains to coffee shops and K‑pop merchandise outlets—to transact using a tokenized form of the Korean won. By integrating CBDC payments into real‑world settings, Hangang seeks to gather critical insights on technical performance, user experience, and merchant acceptance, laying the groundwork for potential nationwide issuance.
Incentive Mechanisms and Merchant Participation
To stimulate active usage, participating merchants will apply a 10% discount to all purchases made with CBDC tokens during the pilot period. Seven Eleven Korea leads the merchant network, with its Digital Innovation division head Moon Dae‑woo highlighting the move as part of a broader digital transformation strategy . Beyond convenience stores, the pilot extends to supermarkets, coffee shops, K‑pop merchandise sellers, and food delivery services. This diverse merchant base ensures that CBDC usage can be tested across multiple retail formats, providing a comprehensive picture of transactional workflows and consumer behavior.
Participant Eligibility and Enrollment Process
Eligibility for Project Hangang requires participants to be at least 19 years old and maintain a deposit account at one of the participating banks: KB Kookmin, Shinhan, Hana, Woori, NongHyup (NH), IBK, or Busan Bank. Interested individuals applied through their banking app, logging in with their existing credentials. Upon selection, participants convert up to KRW 5 million of their bank deposits into CBDC tokens recorded on a distributed ledger; tokens can be redeemed back into deposits without friction. The conversion cap balances meaningful transaction volume against risk management and consumer protection considerations.
Technical Architecture and Transaction Flow
The Hangang pilot employs a permissioned distributed‑ledger platform developed in collaboration with leading domestic and international technology vendors. User deposits are tokenized on the ledger, with each token cryptographically linked to an equivalent fiat won held at the BOK’s vault accounts. During a transaction, the user’s CBDC wallet broadcasts a signed transfer message to the ledger, which validates and settles the payment in near real‑time. Settlement finality occurs within seconds, mirroring the speed of private e‑wallets while maintaining central‑bank control over issuance and redemption. This architecture aims to marry the resilience and auditability of a central ledger with the programmable efficiency of digital tokens.
Comparison with Other Global CBDC Initiatives
South Korea’s pilot aligns with a growing global trend: there are now 44 active CBDC pilots worldwide, covering both wholesale and retail use cases. Retail CBDCs have fully launched in the Bahamas (Sand Dollar), Jamaica (Jam-Dex), and Nigeria (e-Naira), where issuance volumes and user uptake have steadily increased since launch. Meanwhile, the European Central Bank, Bank of England, and People’s Bank of China are conducting advanced trials or legislative groundwork for their digital currencies. Hangang’s emphasis on real‑world retail usage sets it apart from purely technical or wholesale‑focused tests, placing South Korea at the forefront of consumer‑centric CBDC experimentation.
Challenges and Risks of Retail CBDC Adoption
Despite potential benefits, retail CBDCs raise valid concerns. Privacy advocates worry about government surveillance, as every digital‑won transaction could be traceable if not carefully designed to protect user anonymity for small‑value purchases. Technological resilience is also critical: distributed‑ledger platforms must withstand high transaction volumes, cyber threats, and network outages without degrading service. Interoperability with existing payment rails and foreign CBDCs poses another challenge, requiring standardized protocols and cross‑border settlement agreements. Additionally, consumer education and user‑friendly wallet interfaces are essential to foster trust and encourage trial usage among a population accustomed to cash and private e‑wallets.
Strategic Implications for South Korea’s Payment Ecosystem
Project Hangang is more than a technical test; it signals South Korea’s intent to modernize its payment infrastructure in response to declining cash usage and rising fintech competition. By tokenizing deposits on a central ledger, the BOK could reduce reliance on private intermediaries, lower transaction costs, and enhance financial inclusion—especially in underbanked regions. Cross‑border payments may also benefit: programmable CBDCs can embed compliance checks and automations, streamlining remittances and trade finance. Globally, central banks view CBDCs as strategic tools to preserve monetary sovereignty in an era of crypto innovation and big‑tech payment offerings.
Charting the Path to a Digital Won
As Hangang wraps up in June 2025, the Bank of Korea will analyze transaction logs, user feedback, and system performance metrics to refine its CBDC design. Success could lead to broader pilot phases—such as merchant‑specific rollouts or enhanced cross‑border integration—culminating in a full retail CBDC launch by 2026. Lessons from South Korea’s pragmatic, incentive‑driven approach will inform international best practices, advancing the global CBDC narrative. For digital‑asset enthusiasts and blockchain practitioners, Hangang offers a real‑world blueprint for deploying public digital money at scale, blending innovation with regulatory rigor to reshape the future of payments.
