Bank of Korea advances deposit token project toward full-scale deployment

The Bank of Korea and participating banks have discussed operating deposit tokens on a continuous basis with the goal of establishing conditions for a formal rollout, according to briefing materials submitted by the Korea Federation of Banks to the office of People Power Party lawmaker Lee Heon-seung.

The materials noted that a follow-up test would seek to build a foundation for the official introduction and wider adoption of deposit tokens. Participating institutions also reviewed a plan to maintain operations without service interruptions while preparing for eventual commercialization.

Deposit tokens are digital bank deposits issued by commercial banks on top of a wholesale central bank digital currency infrastructure provided by the Bank of Korea. During the first pilot conducted last year, consumers used electronic wallets to complete real-world payments with deposit tokens.

Next phase expands services

The second round of testing would add several new functions. The Bank of Korea and banks plan to increase the number of users and merchants, introduce person-to-person transfers, and allow individual banks to launch their own services tied to deposit tokens.

The project would also include a business-to-business treasury payment program. Under that plan, government subsidies linked to South Korea’s electric vehicle charging infrastructure initiative would be distributed to companies in the form of deposit tokens.

Documents reviewed by the Korea Federation of Banks showed that commercial lenders previously argued the new phase would require substantially more resources than a simple extension of the first pilot. Banks told the central bank that the expanded scope resembled a new project because it included person-to-person transfers and a larger merchant network.

Banks said the additional functions would require anti-money laundering systems, suspicious transaction reporting capabilities, fraud detection infrastructure, further technology development, and dedicated budget allocations. They also called for a long-term roadmap that would cover commercialization plans after testing and urged authorities to adopt a more realistic implementation schedule.

The Bank of Korea later adjusted the project timeline after discussions with participating institutions and provided support for preparations, including consulting work related to commercialization plans, the documents showed.

A financial industry official told local media that the first pilot focused mainly on validating payment functionality, while the next stage would extend to transfers and other financial services. The official said banks face significant technology investment and operational costs as the project expands.

Both projects form part of a wider effort by South Korean financial institutions to evaluate digital payment infrastructure, although the Bank of Korea’s deposit token initiative operates through a CBDC-based banking framework while the Toss Bank project focuses on public blockchain networks and stablecoin applications.

The initiative comes as South Korean financial institutions increase their involvement with tokenized money and blockchain-based payment systems. On June 22, Toss Bank announced a memorandum of understanding with the Solana Foundation to test blockchain infrastructure for cross-border remittances and settlements.

Under that agreement, Toss Bank and the Solana Foundation will study stablecoin-based transfers, payment models, tokenized assets, and other digital asset services. The bank said the work will begin with a proof-of-concept project focused on international remittances and settlement processes.