Bank of Korea Ramps Up CBDC Trial, Targeting 500,000 Users and Real-World Spending
South Korea’s central bank is moving its digital currency experiment out of the lab and closer to the real economy. After a low-key first phase of testing in 2025, the Bank of Korea (BOK) is now preparing a far more ambitious second phase of its central bank digital currency (CBDC) pilot, known as Project Hangang.
The upgraded trial is set to begin in September and will involve nine commercial banks and as many as 500,000 users. Unlike the initial test, which was largely a controlled simulation, the next round will be backed by actual government funds, putting real money and real incentives behind the digital won.
From modest test to mass pilot
The first phase of Project Hangang ran from April to June 2025. Over that three‑month period, 81,000 people opened CBDC wallets, but only about 42% of them ultimately used the tokens to make payments. That left the BOK with a clear message: technical success does not automatically translate into widespread adoption.
Phase 1 was conducted with the participation of seven banks and around 12,000 merchants. In total, the system processed 114,880 transactions-enough to stress‑test the infrastructure and user interfaces, but still small in comparison with mainstream mobile payment platforms in South Korea.
A later review of the pilot results noted a mix of encouraging and disappointing signals. On the positive side, the system generally functioned as designed, and participating banks successfully integrated CBDC wallets into their existing apps. On the negative side, user engagement plateaued quickly, and many wallet holders either abandoned the app or used it only once, suggesting that the incentives and user experience were not yet compelling enough.
Phase 2: groundwork for commercialization
The central bank now wants to turn those lessons into a more realistic test of what a digital won could look like at scale. Officials have described the second phase as the moment when the bank will “lay the groundwork for commercialization” of the CBDC, indicating that this is no longer just a technical proof‑of‑concept.
Key differences set Phase 2 apart:
– More banks: Participation expands from seven to nine commercial banks, widening the distribution channels and testing interoperability across a broader slice of the financial system.
– More users: The user base may grow to as many as 500,000 people-over six times the first phase-pushing the system closer to real‑world transaction volumes and user diversity.
– Real government money: Instead of purely experimental tokens, the CBDC will now be used to move actual state funds, likely including targeted subsidies, benefits, or digital vouchers.
By injecting genuine financial value into the system, the BOK hopes to observe how citizens behave when they can spend CBDC in ways that matter to their daily lives-rather than treating it as a short‑lived curiosity.
Why “real government money” matters
Using genuine public funds elevates the pilot from a test environment to a policy tool. Governments around the world have been exploring CBDCs not only as payment rails, but also as a more precise way to deliver benefits, emergency support, or time‑limited vouchers directly to citizens.
In the Korean context, that could mean:
– Digital vouchers for specific sectors, such as small retailers or local businesses
– Subsidies that can only be spent on public services or essential goods
– Limited‑duration support payments aimed at stimulating consumption in targeted regions
With a CBDC, such transfers can be programmed with spending conditions or expiry dates, making it easier for policymakers to direct money to where it is intended and track whether it has the desired economic effect. Phase 2 of Project Hangang gives the BOK and other state agencies an opportunity to test these ideas in a controlled yet realistic setup.
Lessons from Phase 1: adoption is the real challenge
Technologically, Phase 1 showed that a government‑issued, blockchain‑based version of the won can be created and transacted across multiple banks and merchants. The harder question is whether people actually want to use it when they already have a mature digital payment ecosystem.
South Korea is one of the world’s most cash‑light economies, with citizens accustomed to instant mobile payments via bank apps, credit cards, QR codes, and super‑apps. For a CBDC to gain traction in such an environment, it must offer clear advantages:
– Lower fees for merchants compared with cards
– Frictionless user experience that rivals existing apps
– Unique features, such as programmable payments or instant settlement across banks
– Tangible incentives, such as discounts, rewards, or exclusive access to certain services
The low share of active users in Phase 1-only 42% of wallet holders actually spent the digital tokens-underscores that, absent these advantages, people may simply stick with what they already know.
Role of commercial banks in a digital currency future
The involvement of nine banks in Phase 2 is not just a matter of scale; it is also a test of how CBDCs could coexist with the traditional banking model. Many early CBDC debates have centered on whether digital central bank money would sideline commercial banks by allowing citizens to hold funds directly with the central bank.
Project Hangang is leaning toward a “two‑tier” model, in which:
– The BOK issues the CBDC and maintains the core infrastructure.
– Commercial banks handle user onboarding, wallet interfaces, and customer service.
In practice, that means consumers and businesses would interact with the CBDC through apps and banking channels they already use, keeping banks firmly in the loop rather than disintermediating them. Phase 2 will help determine whether this hybrid approach can deliver both innovation and financial stability.
Technical and policy issues under the microscope
Beyond adoption, the expanded pilot gives the BOK a chance to stress‑test a range of technical and policy questions that will shape any future rollout:
– Scalability: Can the system handle spikes in demand if hundreds of thousands of people transact simultaneously-for example, when a new government benefit is paid out?
– Resilience: How does the CBDC network behave under cyberattacks, network outages, or hardware failures?
– Interoperability: Can transactions flow smoothly between different banks, merchant systems, and potentially other digital payment rails?
– Privacy and data use: How much transaction information is visible to the central bank, and what safeguards are in place to protect citizens’ financial data?
Privacy in particular is a sensitive topic. CBDCs inherently give central authorities more visibility into the flow of money than physical cash does. The BOK will have to strike a balance between anti‑fraud and anti‑money‑laundering goals on one side, and the public’s expectation of financial confidentiality on the other.
How Korea compares to other CBDC experiments
South Korea is far from alone in testing a central bank digital currency, but its approach reflects its status as a technologically advanced, heavily banked economy. Unlike countries where CBDCs are framed as a way to bring unbanked populations into the financial system, Korea’s pilot is mostly about efficiency, programmability, and policy flexibility.
Compared with some large‑scale deployments in other regions, Project Hangang remains in a clearly experimental phase. Yet the scale of Phase 2-half a million users and real government funds-puts it among the more ambitious live tests in developed markets. The outcomes will likely be closely watched by other central banks grappling with how to modernize their monetary systems without destabilizing existing financial infrastructure.
What success would look like for Phase 2
For the Bank of Korea, success in the upcoming phase of Project Hangang will be measured on multiple fronts:
– Meaningful user engagement: A much higher percentage of participants actively using the CBDC for day‑to‑day transactions.
– Positive merchant feedback: Evidence that merchants find the system easy to integrate and potentially cheaper than card payments.
– Policy effectiveness: Clear data showing whether CBDC‑based subsidies or vouchers reach their targets more effectively than traditional methods.
– Operational stability: Smooth functioning of the system despite the larger scale and the use of real funds.
Even if the BOK decides against a rapid, nationwide rollout, these insights could inform future digital payment policies, regulatory frameworks, and the design of any eventual production‑grade CBDC.
What it means for ordinary users
For most Koreans, Phase 2 will look less like an abstract financial experiment and more like a new payment option embedded in the banking apps they already use. Participants may be invited by their banks to open a CBDC wallet, receive government‑funded digital vouchers, and spend them at designated merchants.
If the experience feels seamless-no extra hoops, clear incentives, fast and reliable payments-some users may begin to see the digital won as a natural extension of their existing financial behavior. If it feels clunky or redundant, the pilot will highlight just how difficult it is to insert a new payment rail into an already saturated landscape.
A cautious step toward a digital won
The expansion of Project Hangang signals that the Bank of Korea is no longer treating CBDCs as a distant theoretical concept. By scaling from 81,000 pilot wallets to a potential 500,000 users and moving from test tokens to real government funds, the central bank is testing not just technology, but the political, social, and economic implications of a digital national currency.
Whether this ultimately leads to a fully operational digital won remains an open question. What is clear is that the next phase of the pilot, starting in September, will be a decisive test of how ready South Korea is to integrate a CBDC into its highly digital, already sophisticated payment ecosystem-and whether citizens and businesses see enough value in the change to embrace it.