The Bank of Korea will launch Phase 2 of the Han River Project in September, expanding the pilot scope for its central bank digital currency. The new phase will increase the number of participating banks to nine, raise the user cap to 500,000, and introduce real-world government subsidy disbursement scenarios for the first time.
Limited activity in Phase One
The first phase took place from April to June 2025. The Bank of Korea, in collaboration with seven banks and 12,000 merchants, tested deposit token payments, opening 81,000 wallets and completing 114,880 transactions. However, only about 42% of the wallets actually engaged in spending, indicating limited user activity.
Add more payment features in phase two.
To increase usage, the Bank of Korea added features closer to everyday banking services in the second phase, including biometric payments such as fingerprint, peer-to-peer wallet transfers, automatic top-ups, recurring automatic payments, cash receipt generation, and interest payments.
This test still employs a two-tier structure. The Bank of Korea issues a wholesale CBDC solely for back-end settlement between financial institutions; deposit tokens issued by commercial banks based on this system are intended for use by consumers and merchants. The head of the Bank of Korea’s CBDC planning team stated that this design sits between a traditional CBDC and a stablecoin.
First test of government subsidies distributed on-chain
The second phase will also introduce the first test of government subsidies distributed via programmable deposit tokens. These tokens can be pre-programmed with specific uses, eligible merchants, and usage periods to restrict how the subsidy funds are spent.
For regular users, this means that some subsidies in the future may be deposited directly into digital wallets. For merchants, one of the key focuses of the test is whether this type of payment can reduce the transaction fees charged by card networks, particularly for high-volume merchants.
Number of participating banks increases to nine
The participating institutions have been expanded to include Gyeongnam Bank and iM Bank. The seven previously participating banks are National Bank, Shinhan Bank, Hana Bank, Woori Bank, Nonghyup Bank, Korea Small Business Bank, and BNK Busan Bank. Unlike Phase One, Phase Two currently has no set end date.
The newly appointed Governor of the Bank of Korea, Shin Hyun-soo, has listed the "Han River Project" as one of his key priorities since taking office. Meanwhile, Asia Bank is advancing the design of a system for a KRW-pegged stablecoin. Discussions in Seoul around stablecoin legislation have intensified since mid-2025.
At the international level, the programmability of CBDCs remains controversial. Supporters argue that it enhances the efficiency of subsidy distribution and reduces fraud; critics, however, express concerns that features such as spending restrictions, expiration mechanisms, and wallet freezes could expand public sector control over payment behaviors.