LG CNS announced Monday that it will formally participate in Phase 2 of "Project Hangang," the Bank of Korea's (BOK) pilot program for institutional digital currency and deposit tokens. The new phase will extend deposit tokens — bank deposits converted into token form — beyond real transactions for the general public to include government subsidy disbursements.
Project Hangang is a collaborative initiative among the BOK, the government and the banking sector to verify whether deposit tokens can serve as a new payment method and an efficient tool for fiscal execution, with the goal of eventually linking the results to commercialization. LG CNS, a major South Korean IT services provider, serves as the lead contractor for Phase 2, following its role in Phase 1, overseeing the operation and advancement of the digital currency system.
The core objective of Phase 2 is to lay the groundwork for commercializing deposit tokens. Notably, applying deposit tokens to public fiscal disbursements such as government subsidies is a world first. The government is reviewing a plan to disburse subsidies for an electric vehicle charging infrastructure project — set to launch in the first half of this year — in the form of deposit tokens. Once subsidies are paid via deposit tokens, the entire process from disbursement to final settlement is recorded on a blockchain in real time, enhancing transparency. Digital vouchers using deposit tokens can be preconfigured with specific purposes, timeframes and amounts, ensuring subsidies are spent effectively.
Ahead of the Phase 2 launch, LG CNS completed development of new features to improve deposit token usability, including biometric authentication, peer-to-peer transfers and automatic deposit token deposits and withdrawals. These upgrades will expand the number of participating banks and merchants where consumers can use deposit tokens. In addition to the existing participants — KB Kookmin Bank, Shinhan Bank, Woori Bank, Hana Bank, IBK Industrial Bank of Korea, NH NongHyup Bank and BNK Busan Bank — BNK Gyeongnam Bank and iM Bank have expressed their intent to join. Consumers can convert bank deposits into deposit tokens and pay via QR code at designated online and offline stores. Accepted merchants will expand to include convenience stores, supermarkets, coffee shops and bookstores.
Deposit token-based payments reduce intermediary settlement steps, lowering transaction fee burdens for merchants and helping both large businesses and small business owners cut costs. Consumers are also expected to benefit from greater payment convenience and enhanced security.
"We will continue to advance digital currency infrastructure that can be stably utilized across public finance and everyday life," said Kim Hong-geun, Executive Vice President of LG CNS's Digital Business Division. "We will also actively support the development of diverse innovative services centered on deposit tokens."