BNK Kyongnam Bank joins Bank of Korea's 'Project Han River Phase 2' CBDC pilot to test deposit token payments

BNK Kyongnam Bank will join the Bank of Korea's CBDC pilot "Project Han River Phase 2" to test deposit token-based payment and settlement services.

The bank said Tuesday it has been newly designated by the Financial Services Commission as an innovative financial service provider for "deposit token-based payment and settlement services within a CBDC framework."

In response, BNK Kyongnam Bank plans to build a mobile banking-based deposit token service as part of Project Han River Phase 2 and verify a range of financial services using the technology in a live transaction environment.

Project Han River Phase 2 moves beyond the technology-verification focus of the first phase to test the practical viability of services in an environment where real users and merchants participate. The number of user wallets has been expanded to a maximum of 500,000, and the range of participating merchants has widened from small businesses to large enterprises.

The pilot adds a variety of convenience features, including peer-to-peer remittances, an automatic conversion function that switches funds to deposit tokens when a linked bank account balance falls short, biometric authentication and cash receipt issuance.

The pilot also includes a program for disbursing public funds — covering local government subsidies and voucher payments — using smart contracts. It aims to verify efficiency gains in public payment and settlement, streamlined reconciliation procedures and prevention of fraudulent claims.

BNK Kyongnam Bank has also been expanding its digital financial services. In June, it launched an online food delivery service within its mobile banking app, building a community platform that links lower merchant fees than private delivery apps with Zero Pay benefits. The bank said it intends to further strengthen its digital payment competitiveness through its participation in the deposit token pilot.

"Through our designation as an innovative financial service provider and participation in the project, we will confirm the commercial viability of CBDC-based financial services and continue expanding customer-centered digital financial services," said Lee Ju-hyeong, executive vice president of BNK Kyongnam Bank's AI and Digital Group.

Meanwhile, Project Han River Phase 2 involves major commercial banks as well as regional banks. Participating banks are responsible for issuing deposit tokens and providing customer services, while the Bank of Korea supports CBDC issuance and settlement infrastructure.