The Governor of the South Korean Central Financial institution says Seoul is planning to make use of its Central Financial institution Digital Foreign money (CBDC) to pay over 110 trillion received ($79.3 billion) in authorities subsidies.
The South Korean newspaper Hankook Ilbo reported that the Financial institution of Korea (BOK) chief Rhee Chang-yong mentioned the funds can be made as a part of a brand new “digital forex pilot undertaking.”
Rhee was talking throughout a press convention held in central Seoul on August 28 following a Financial Coverage Committee assembly earlier within the day.
South Korean CBDC: Again From the Useless?
The transfer has come as one thing of a shock in Seoul. The BOK introduced in late June this 12 months that it was placing CBDC testing on maintain in favor of creating stablecoin-powered options.
Rhee mentioned the subsidy transfer was a part of the higher Han River Venture, the nation’s wider CBDC pilot.
The media outlet mentioned that the brand new CBDC transfer was the brainchild of the Ministry of Technique and Finance.
The ministry thinks that CBDC-powered subsidies will assist stop fraudulent use and enhance fiscal coverage effectivity. Rhee defined:
“That is a part of the second Han River Venture pilot. Utilizing digital fiat to pay subsidies will let principal contractors higher handle subsidies when getting into into agreements with subcontractors.”
The BOK and the ministry plan to situation contractors with CBDC tokens as a substitute of financial institution transfers or vouchers.
The events assume that blockchain know-how will assist hint funds and guarantee they don’t seem to be being misused. Rhee added:
“Throughout his current go to to the BOK, Koo Yun-cheol, the Deputy Prime Minister and Minister of Technique and Finance, mentioned he thinks this can improve the effectivity and transparency of subsidy funds.”
On August 22, Deputy Prime Minister Koo Yun Cheol attended the joint ministerial briefing on the brand new authorities’s financial development technique and delivered a press release on the Authorities Advanced Seoul. pic.twitter.com/RfSVzp8o0n
— MOEF – Korea (@moefkorea_eng) August 22, 2025
We Solely Need to Work with Banks That Favor CBDC Biz, Says BOK
The BOK was eager to level out that the brand new undertaking would differ from the “first” pilot, which wrapped up within the first half of this 12 months.
Whereas the primary pilot centered largely on industrial banks and their clients, the subsidy-focused pilot will probably be personal sector-led.
Lots of the banks that took half within the first pilot expressed their displeasure with CBDC launch plans.
They complained that they thought it unfair that they need to shoulder the burden of creating infrastructure funding prices.
However Rhee left the door open to the banking sector, suggesting the BOK is blissful to companion with lenders who’re nonetheless eager on CBDC enterprise. The Governor mentioned:
“Contemplating the size of the undertaking, at 110 trillion received, I imagine this be engaging for banks. We plan to give attention to working with banks with a powerful willingness to take a position [in the project].”
The South Korean received strengthened after Financial institution of Korea Governor defended its overseas alternate interventions as efforts to stem the decline and mentioned it’s a part of talks with the US authorities https://t.co/jUTgYGUiNh
— Bloomberg (@enterprise) August 28, 2025
‘Accelerated’ Plans
Rhee additionally advised that Seoul’s stablecoin pivot has not sounded the loss of life knell for the BOK’s CBDC plans.
Certainly, the Governor defined that after lawmakers have finalized the creation of recent crypto and stablecoin laws, the BOK plans to “speed up” the Han River Venture. Rhee mentioned:
“We now have mentioned upcoming [crypto and stablecoin] laws with the ministry. The BOK has additionally exchanged sensible opinions with the [regulatory] Monetary Providers Fee. We hope that the BOK’s views will probably be well-reflected in these deliberations.”
The BOK has beforehand mentioned that it desires to see a phased CBDC and stablecoin adaptation course of. It desires this to start with conventional monetary establishments, corresponding to banks.
Establishments like these are which might be topic to strict BOK supervision, Hankook Ilbo remarked.
South Korean monetary and crypto chiefs are rising stressed, nevertheless. They’ve complained that progress on stablecoin laws has “slowed to a standstill.”
It’s because lawmakers can’t agree on the matter of whether or not or not tech companies ought to be allowed to situation KRW-pegged stablecoins.
Conservative voices have urged Seoul to limit issuance to the industrial banking sector. However progressive opponents say such a transfer would stifle innovation.
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