South Korea expands its digital payment pilot, Project Hangang, to 500,000 wallets and introduces new transaction limits.
South Korea's Financial Services Commission has green-lit the second phase of Project Hangang, which explores digital payments through a Central Bank Digital Currency (CBDC). This phase will see an increase in user wallets from 100,000 to 500,000 and the number of participating banks rising from seven to nine.
Testing is anticipated to commence in September, with the wallet cap applying to the number of wallets rather than the number of unique users. Participants will not own the CBDC directly; instead, they will access deposit tokens issued by commercial banks for their transactions.
Increased Limits for Users
The new phase will allow each wallet to store up to 10 million won, a significant jump from the previous limit of 1 million won. Furthermore, the overall transaction cap will be raised from 5 million to 100 million won.
Transfer limits for individuals and sole proprietors will be set at:
- 1 million won per transaction;
- 5 million won daily.
Corporate users will have varying limits based on their transaction methods. Internet banking will allow transfers of up to 1 billion won at once and a daily total of 5 billion won, while mobile app transfers will be limited to 100 million and 500 million won, respectively.
New features will include wallet-to-wallet transfers, biometric verification for transactions, and automatic replenishment of deposit token balances. If funds are insufficient, the system will automatically transfer the needed amount from the user's standard bank account.
Additionally, companies will benefit from remote wallet openings and the capability to issue cash receipts, while the range of acceptance points will expand to include both small businesses and larger enterprises.
New Banks Join the Initiative
Joining the initial seven banks—KB Kookmin Bank, Shinhan Bank, Woori Bank, Hana Bank, Nonghyup Bank, Industrial Bank of Korea, and BNK Busan Bank—are Gyeongnam Bank and iM Bank, now recognized as experimental financial service operators. The existing banks will have their permits adjusted to comply with the new phase's criteria.
During the first phase, from April to June 2025, approximately 81,000 wallets were opened, with 114,880 transactions completed.
CBDC Framework and Future Plans
Project Hangang is structured on a two-tier model where the Bank of Korea issues wholesale CBDC for interbank transactions. Commercial banks then create deposit tokens, which represent clients' existing funds and are used for purchases and transfers.
This means the deposit token is the liability of the issuing commercial bank, while the CBDC is used for settlement between banks. The second phase will also facilitate certain government spending through smart contracts, enabling direct transfers of deposit tokens to recipients with specific conditions attached.
Looking ahead, South Korean authorities are eyeing a pilot for tokenized government bonds by 2027, with settlements linked to the wholesale CBDC within Project Hangang's framework.
