The next phase of its CBDC push starts in September—with nine banks involved, up to 500,000 users spending the tokens, and real government money on the line this time.
Phase 2 addresses the engagement problem with functionality that resembles actual banking. New features include biometric fingerprint approvals, person-to-person wallet transfers, automatic top-ups (your linked bank account converts funds into deposit tokens automatically when the balance runs low), recurring auto-payments, cash receipt generation, and interest payments.
For the first time, the pilot will also test government subsidy disbursements using programmable tokens.
For regular users, that architecture could eventually mean receiving government benefits directly into a digital wallet instead of waiting for a voucher or a check. For small businesses and retailers, the test will measure whether deposit token payments can undercut the interchange fees that card networks charge on every transaction—a cost that compounds quickly for high-volume merchants.
Phase 2 will run programmable deposit tokens with spending rules baked in: funds locked to permitted purposes, vendors, and time windows, replacing the paper trail of manual audits and cutting fraud at the point of disbursement.
In other words, this implementation gives the Bank of Korea broader control into how citizens spend money given by the government for a specific purpose.
Joining the original seven banks—KB Kookmin, Shinhan, Hana, Woori, Nonghyup, Industrial Bank of Korea, and BNK Busan—are Gyeongnam Bank and iM Bank. The pilot will run open-ended rather than with a fixed close date.
CBDCs, however, are not without controversy. The same programmability that makes deposit tokens attractive to regulators is exactly what worries critics. Rules that lock government funds to specific vendors can just as easily be extended beyond subsidies—expiring balances, spending category restrictions, or wallet freezes without a court order. Unlike cash, every CBDC transaction is logged on a ledger the central bank and its partners can read.
