- The Bank of Korea continues experimenting with wholesale CBDCs and tokenized deposits while weighing its next move on retail CBDCs.
- South Koreans are not too pleased that retail CBDCs are still in the government’s plans.
- Loss of privacy and financial freedom, as well as cybersecurity threats, remain the main reasons protesters are pushing back against CBDCs and the broader adoption of tokenized bank deposits.
The Bank of Korea (BOK), South Korea’s central bank, is accelerating its wholesale central bank digital currency (CBDC) project. It’s also experimenting with bank-issued deposit tokens.
However, the institution has yet to decide what to do with the retail version of its CBDC amid strong opposition to its implementation.
Wholesale CBDCs, Retail CBDCs, and Deposit Tokens
Before proceeding, let’s explore the key terms in this article: wholesale CBDCs, retail CBDCs, and deposit tokens.
Wholesale CBDC
A wholesale CBDC (wCBDC) is a digital representation of central bank reserves exclusively available to institutions. Commercial banks and regulated financial entities mainly use this blockchain-powered instrument to clear and settle interbank and cross-border transactions in near real time, around the clock. It essentially streamlines back-end operations across market participants.
Retail CBDC
Meanwhile, a retail CBDC (rCBDC) is a digital substitute for cash that the public can use for regular purchases, remittances, and other transactions. Unlike a stablecoin typically issued by a non-bank entity, which derives its value from reserve assets, commercial liabilities, or synthetic mechanisms, an rCBDC represents a direct liability of the central bank.
Deposit Token
A deposit token, by contrast, is a digital representation of commercial bank money. It basically occupies a middle ground between traditional commercial bank accounts and digital currencies.
Commonality
All of these are pegged and redeemable 1:1 to their underlying assets. For example:
- A wCBDC such as Project Helvetia is tied 1:1 to central bank reserve balances through Switzerland’s Real-Time Gross Settlement (RTGS) system.
- The EU’s digital euro is anchored 1:1 to the euro.
- A deposit token like JPMorgan Coin (JPMC) corresponds to digital claims on bank deposits held by JPMorgan.
South Korea’s CBDC and Tokenized Deposit Experiments
According to CBDC Tracker, South Korea is already preparing the launch phase of its wCBDC. Under Project Hangang, the initiative is in the second phase of its live pilot test.
The project traces its origin to the BOK’s “Virtual Currency and CBDC” research task force in January 2018. By April 2020, the institution had begun reviewing the project’s technical and legal aspects.
In May 2020, the BOK issued an invitation for companies interested in developing its “CBDC simulation system.” It offered a 4.96 billion won (approximately $3.46 million) contract for the eligible company. The central bank again issued invitations for an 85.31 million won contract (roughly $59,508) in April and May 2022.
The BOK inked a Memorandum of Understanding (MOU) with Samsung in May 2023 for cooperation centered on offline CBDC technology. It also marked the inclusion of Crust, Engle, Kakao Bank, Kakao Pay, Kakao Enterprise, KPMG, 14 banks, and the Financial Settlement Institute as project participants.
In November 2023, the BOK clarified that it hadn’t decided whether it would issue a CBDC, but continued the initiative nonetheless. Then, it signed a 9.68 billion won ($6.75 million) contract with LG CNS for “CBDC usability testing.”
The BOK initially planned to launch a pilot involving 100,000 South Koreans for its rCBDC in 2024. For undisclosed reasons, though, it postponed the event.
It joined the Bank for International Settlements’ (BIS) Project Agora initiative by the second quarter of the same year to explore wCBDCs and commercial bank deposits on programmable platforms. The developments culminated in an MOU signed by the BOK, the Financial Services Commission (FSC), and the Ministry of Science and ICT (MSIT) to advance the two projects.
In 2025, the BOK eventually introduced Project Hanggang to pilot CBDCs and deposit tokens. Busan Bank, Hana, Kookmin, Nonghyup, Shinhan, Woori, and the Industrial Bank of Korea comprised the testing. The central bank, however, raised alarms about CBDCs’ potential impact on people’s privacy.
Temporary Pause and Resumption
Testing on merchants followed, but ballooning project costs and the inconvenience of using CBDCs during the process led to a temporary halt. That continued until March 2026, when the central bank greenlit the next leg of Project Hanggang.
To date, experimentation with wCBDCs and deposit tokens is ongoing. Still, the BOK continues to weigh issuing an rCBDC.
Citizens Rally Against CBDCs
With rCBDCs not yet off the table, Crypto in America’s Eleanor Terrett shared a photo showing strong opposition to the move. In fact, people took their plea outside the central bank’s walls with a protest banner.
The banner read, “CBDC monitors and controls my assets. If a bank is hacked, all my assets could disappear. CBDC is very dangerous.”
The sentiment shows that South Koreans’ major concerns about implementing a CBDC center on potential government surveillance and loss of financial freedom—a universal concern among citizens in countries planning to enforce similar measures. Furthermore, protesters point to the risk of losing their funds to hacking and other cybersecurity threats as they give up physical currency or bank deposits to a unified, centralized digital infrastructure with a higher concentration of failure.
