Project Han-Gang Enters Phase 2 Testing... Kyongnam Bank and iM Bank Newly Designated as Innovative Financial Institutions

Expansion of Deposit Token Payment and Remittance Functions

The Bank of Korea's digital currency (CBDC) system, which tokenizes bank deposits for payments and remittances through 'Project Han-Gang,' is entering its second phase of testing. New features for payments and remittances have been added.

On July 15, the Financial Services Commission announced at its regular meeting that it has newly designated five innovative financial services, including the second phase of Project Han-Gang, prepaid cards for foreign visitors to Korea, and joint loans by KakaoBank and Busan Bank. The designation of seven existing services has also been amended. As a result, the total number of designated innovative financial services has increased to 1,111.

The Financial Services Commission has newly designated Kyongnam Bank and iM Bank as participating banks in the second phase of Project Han-Gang. For the seven existing participant banks from phase one—KB Kookmin Bank, Shinhan Bank, Woori Bank, Hana Bank, NH NongHyup Bank, IBK Industrial Bank of Korea, and Busan Bank—the designations have been modified to reflect expanded user base and areas of use, as well as the addition of remittance functions.

In the second phase, the maximum number of deposit token wallets will increase from 100,000 to 500,000. Usage areas will also be expanded from the existing partner merchants to include small businesses and large enterprises. Transfers between wallets owned by individuals and corporations will become possible.

The holding limit for deposit tokens will increase from KRW 1 million to KRW 10 million per wallet. The cumulative limit will also be expanded from KRW 5 million to KRW 100 million. Individuals can send up to KRW 1 million per transaction and up to KRW 5 million per day. Corporations can send up to KRW 1 billion per transaction and up to KRW 5 billion per day.

A new feature will allow any shortfall in a deposit token balance to be automatically converted from a linked bank account. Additional features include biometric authentication, online business wallet openings, and cash receipt issuance.

The business scope will be further expanded to include a pilot project for treasury disbursements.

A payment service for foreign visitors to Korea has also been designated as an innovative financial service. Orange Square will offer a prepaid card for foreign tourists using unmanned currency exchange devices and an application, while Naver Financial will introduce a prepaid e-payment instrument for foreigners.

Foreign tourists will be able to use prepaid cards with a maximum limit of KRW 1 million without the need for local identity verification. However, to prevent illegal activities using forged or other people's passports, identity verification will be carried out using the IC chip of e-passports and facial authentication.

The joint loan service from KakaoBank and Busan Bank has also been newly designated. Consumers will be able to apply for loans through the KakaoBank application, and after both banks conduct separate reviews, the loan will be executed based on an agreed limit and interest rate.

The Financial Services Commission expects that combining KakaoBank's low funding costs and online platform with Busan Bank's corporate loan review capabilities will enable low-interest loans for small and medium-sized enterprises (SMEs) and small business owners.

This content was produced with the assistance of AI translation services.