[Won Internationalization, Breaking a 30-Year Taboo]②First Steps with New Infrastructure... For Success, This Must Follow

Pilot Offshore Won Settlement System Launches in September

Foreigners to Open Won Accounts and Remit Between Overseas Entities


Restrictions Eased on Won Loans and Won-Denominated Securities for Foreigners

Incentives Introduced: Lo

Editor's NoteThe Korean won stands at a turning point. The government has unveiled a “Won Internationalization Roadmap” aimed at transforming the won into a freely convertible currency. More than 30 years have passed since the opening of Korea’s capital markets, and while Korea’s economic scale has grown, the global standing of the won has not kept pace. This is largely because the country, having endured the Asian Financial Crisis and the Global Financial Crisis, has imposed restrictions on the use of the won overseas out of trauma over sharp drops in its value due to dollar liquidity crunches. However, considering the need for strengthened economic fundamentals and the advancement of capital markets, internationalizing the won is an essential task. There are two key preconditions for success: First, in terms of infrastructure and regulation, there should be no obstacles to the seamless use of the won in global markets. Second, from a demand and supply perspective, the won must have versatile use cases and be widely utilized. Through this series, we will examine the changes facing the won as it steps onto the path of internationalization after 30 years of restrictions, and explore what further steps are needed for the won to take its place as a currency that reflects the strength of Korea’s economy.

The core of the government’s won internationalization roadmap is the creation of infrastructure to enhance the currency’s global acceptability. It is built on two pillars: the launch of a 24-hour foreign exchange market and the implementation of offshore won settlement. The government has also outlined plans to broaden both the use and supply of the won as it takes its first steps. Ultimately, experts note that won internationalization can only succeed if the currency’s appeal as an investment vehicle is increased.

24-Hour FX Market Opens, Offshore Settlement Network Built... Using the Won Gets Easier

The first step toward internationalization is the 24-hour foreign exchange market. To eliminate gaps in won-dollar transactions, the government has been operating the domestic FX market around the clock since July 6, 2026. This marks the start of uninterrupted weekday trading, coming two years after trading hours were extended to 2 a.m. in 2024.

As a result, the domestic FX market now covers the New York financial market’s closing hours, in addition to London. The intention is to first remove the most basic barrier—the lack of won-dollar forex options for foreign investors actively trading on the New York market. With trading available at all hours, it is expected that some demand for offshore non-deliverable forwards (NDFs), which increase exchange rate volatility by settling only on price differences, will be absorbed.

Another important change is the liberalization of won transactions among foreigners so that the won can be conveniently held overseas. To support this, the government created an offshore won settlement system. The key points are establishing the necessary systems and easing regulations so that overseas-based financial institutions and overseas branches of domestic banks can offer won-related services to foreign investors.

Once the system is in place, foreign financial institutions registered as offshore won settlement institutions will be able to hold centralized Korean won accounts with domestic banks and manage won directly. This makes not only the ownership but also transactions and lending between offshore settlement institutions possible. With this foundation, foreign financial institutions can offer local clients a range of won-denominated services, from transfers to settlement and lending. As a result, it will become much easier for non-residents to invest in Korea, remit funds between foreigners, and take out won-denominated loans.

Currently, foreigners wishing to transact in won must open accounts directly with domestic foreign exchange banks. This process is cumbersome, requiring at least one visit to Korea or reliance on a proxy for identity verification, and transfers between foreigners were not possible, effectively blocking free transactions.

However, with the offshore won settlement system, foreigners will be able to open won accounts through their local banks, provided those banks are registered as offshore settlement institutions, without needing to interact with a Korean bank directly. These accounts can be used to invest in domestic equities and other assets, obtain won mortgages, and remit funds between foreigners. Except for domestic real estate transactions, advance reporting requirements have been waived, further reducing inconvenience.

The government is building an offshore won settlement network at the Bank of Korea which will enter trial operation in September. The system will be fully operational on a 24-hour basis beginning in January next year. Lee Hyung-ryul, director-general of the International Finance Bureau at the Ministry of Economy and Finance, stated, "The key concept is to completely remove barriers to won transactions so that investment can proceed seamlessly."

Easing Restrictions on Won Lending, Incentivizing Settlement... Will the Use of the Won Increase Dramatically?

On the 6th, the first day the foreign exchange market was open 24 hours, attendees including Deputy Prime Minister and Minister of Strategy and Finance Koo Yoon-cheol (center), First Vice President of the Bank of Korea Kwon Minsoo (second from the left), and Chairman of Hana Financial Group Ham Young-joo (second from the right) gathered for a commemorative photo at the Hana Bank dealing room in Jung-gu, Seoul. 2026.7.6 Photo by Jo Yongjun

Until now, Korea has taken a particularly conservative approach to allowing foreigners, namely non-residents, to borrow won. This stems from concerns—such as those following George Soros’ attack on the British pound in 1992—that a surge of foreign currency speculation, with foreigners borrowing and rapidly selling won, could trigger a sudden depreciation. However, this has also served as a barrier to won internationalization by limiting the overall amount of won that foreigners can hold.

In the current roadmap, the government has decided to partially ease restrictions on won lending to foreigners. Previously, foreign exchange banks were exempt from reporting loans up to 1 billion won to non-residents; for loans between 1 and 30 billion won, reports were required to the foreign exchange bank, and for amounts exceeding 30 billion won, to the Bank of Korea. The government will more than double these reporting thresholds. In addition, barriers to issuing offshore won-denominated securities have been lowered by shifting to a post-reporting system, encouraging the issuance and holding of won bonds overseas.

Various incentives to boost the use of the won for settlement have also been introduced. The government plans to pursue local currency transaction (LCT) systems with countries expected to have substantial direct transaction demand in the future, considering factors such as trade volume and employment/residence ties. Participation in Asian regional micropayment joint projects, such as "Project Nexus," is also under consideration to raise the won’s share in Asian settlements.

Other policy measures being considered include providing incentives such as lower interest rates or trade insurance for merchants settling trade in won. These steps aim to raise the portion of export-import settlements in won, which currently stands at less than 2%.

Jeong Youngsik, senior research fellow at the Korea Institute for International Economic Policy (KIEP), said, "Ultimately, in order to foster won settlements, it is important for our companies’ headquarters and overseas branches to be able to transact directly in won." He added, "Once direct won transactions between headquarters and branches become smooth, such business will gradually expand to local companies as well."

While the government has taken the first step toward internationalization by relaxing longstanding restrictions, experts note that for the won’s global use to increase substantially, it is crucial to make the currency fundamentally more attractive. Most importantly, the expectation should be that simply holding won or investing in won-denominated assets like stocks or bonds will yield profits.

Park Seonguk, research fellow at the Korea Institute of Finance, said, "For global investors, it’s important that won, whether in bonds or equities, becomes a viable investment target." He added, "The more situations in which international investors maintain won positions, the more its use will naturally expand."

Likewise, strengthening the economy’s size and stabilizing the value of the won are also prerequisites for sustained internationalization. The larger the scale of production, trade, and financial markets, the more demand there will be for won, increasing the likelihood of its adoption as an international currency. Lee Junghwan, professor of economics and finance at Hanyang University, stated, "Successful internationalization of the won will only be possible if Korea’s economic power grows further." Korea’s high export dependency and tendency to have the won classified as a risk-on currency make it more prone to exchange rate volatility in response to external conditions. However, if the FX market deepens and broadens, greater liquidity could buffer external shocks and reduce the volatility associated with holding won.

Boosting the won’s appeal as an investment vehicle requires simultaneous efforts to strengthen the competitiveness of Korea’s domestic financial markets. The widespread international use of the dollar and the pound sterling is backed by the fact that New York and London have become world-leading financial hubs with a variety of financial products and sophisticated distribution infrastructure. For the widespread international adoption of the won, Korea’s financial products, distribution structures, and global competitiveness of financial institutions must advance together.

Furthermore, the won’s global attractiveness depends not only on the competitiveness of financial markets, but also on trust in the Korean economy and the stability of its institutions. Park Sunyoung, professor of economics at Dongguk University, said, "The appeal of a currency ultimately encompasses not only how easily it can be used and held, but also the degree of trust in the underlying economy and the stability of the rules and institutions."

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