The Bank of Korea officially launched the second phase of Project Hangang on March 18, 2026, expanding its flagship digital currency pilot to nine commercial banks. The project aims to build blockchain-based payments and settlement infrastructure using a wholesale central bank digital currency layer underpinning commercial bank deposit tokens.
Two new banks have joined the pilot for Phase 2. Kyongnam Bank and iM Bank now participate alongside the seven institutions from Phase 1, which are KB Kookmin, Shinhan, Woori, Hana, NH Nonghyup, IBK Industrial, and BNK Busan. Together, these nine banks cover the majority of South Korea's retail banking market.
Phase 2 introduces two critical real-world use cases that go well beyond the limited testing of the first phase. The first involves government subsidy distribution using deposit tokens, allowing public funds to flow through the new digital infrastructure. The second enables nationwide consumer payment and peer-to-peer transfer services using won-pegged tokens built on the wholesale CBDC settlement layer.
The expanded scope reflects lessons learned from Phase 1, where low user engagement prompted the central bank to add practical features. Phase 2 incorporates auto-recharge functionality and biometric authentication to improve usability and drive adoption. The Bank of Korea has stated an explicit objective of reducing payment fees for small business owners, positioning the deposit token infrastructure as an alternative to credit card networks that impose significant merchant fees.
Large-scale follow-up transactions involving all nine banks are planned for the second half of 2026. The central bank has also signaled its intention to build financial infrastructure connected to emerging industries, including provisions for AI-based automatic payments. This makes South Korea one of the first jurisdictions to explicitly design its CBDC architecture with machine-initiated payments in mind.