South Korean Central Bank Wants to Use CBDC to Pay $79.3B Worth of Gov’t Subsidies

The Governor of the South Korean Central Bank says Seoul is planning to use its Central Bank Digital Currency (CBDC) to pay over 110 trillion won ($79.3 billion) in government ￰1￱ South Korean newspaper Hankook Ilbo reported that the Bank of Korea (BOK) chief Rhee Chang-yong said the payments would be made as part of a new “digital currency pilot project.” Rhee was speaking during a press conference held in central Seoul on August 28 following a Monetary Policy Committee meeting earlier in the ￰2￱ Korean CBDC: Back From the Dead? The move has come as something of a surprise in ￰3￱ BOK announced in late June this year that it was putting CBDC testing on hold in favor of developing stablecoin -powered ￰4￱ said the subsidy move was part of the greater Han River Project, the country’s wider CBDC ￰5￱ Bank of Korea’s offices in Gwangju.

() The media outlet said that the new CBDC move was the brainchild of the Ministry of Strategy and ￰6￱ ministry thinks that CBDC-powered subsidies will help prevent fraudulent use and improve fiscal policy ￰7￱ explained: “This is part of the second Han River Project ￰8￱ digital fiat to pay subsidies will let principal contractors better manage subsidies when entering into agreements with subcontractors.” The BOK and the ministry plan to issue contractors with CBDC tokens instead of bank transfers or ￰9￱ parties think that blockchain technology will help trace funds and ensure they are not being ￰10￱ added: “During his recent visit to the BOK, Koo Yun-cheol, the Deputy Prime Minister and Minister of Strategy and Finance, said he thinks this will increase the efficiency and transparency of subsidy payments.” On August 22, Deputy Prime Minister Koo Yun Cheol attended the joint ministerial briefing on the new government’s economic growth strategy and delivered a statement at the Government Complex ￰11￱ — MOEF – Korea (@moefkorea_eng) August 22, 2025 We Only Want to Work with Banks That Favor CBDC Biz, Says BOK The BOK was keen to point out that the new project would differ from the “first” pilot, which wrapped up in the first half of this ￰12￱ the first pilot focused largely on commercial banks and their customers, the subsidy-focused pilot will be private ￰13￱ of the banks that took part in the first pilot expressed their displeasure with CBDC launch ￰14￱ complained that they thought it unfair that they should shoulder the burden of making infrastructure investment ￰15￱ Rhee left the door open to the banking sector, suggesting the BOK is happy to partner with lenders who are still keen on CBDC ￰16￱ Governor said: “Considering the scale of the project, at 110 trillion won, I believe this be attractive for ￰17￱ plan to focus on working with banks with a strong willingness to invest in the project.” The South Korean won strengthened after Bank of Korea Governor defended its foreign exchange interventions as efforts to stem the decline and said it is part of talks with the US government ￰0￱ — Bloomberg (@business) August 28, 2025 ‘Accelerated’ Plans Rhee also suggested that Seoul’s stablecoin pivot has not sounded the death knell for the BOK’s CBDC plans.

Indeed, the Governor explained that once lawmakers have finalized the creation of new crypto and stablecoin legislation, the BOK plans to “accelerate” the Han River ￰18￱ said: “We have discussed upcoming crypto and stablecoin legislation with the ￰19￱ BOK has also exchanged practical opinions with the regulatory Financial Services ￰20￱ hope that the BOK’s views will be well-reflected in these deliberations.” The BOK has previously said that it wants to see a phased CBDC and stablecoin adaptation ￰21￱ wants this to begin with traditional financial institutions, such as ￰22￱ like these are that are subject to strict BOK supervision, Hankook Ilbo ￰23￱ Korean financial and crypto chiefs are growing restless, ￰24￱ have complained that progress on stablecoin legislation has “slowed to a standstill.” This is because lawmakers cannot agree on the matter of whether or not tech firms should be allowed to issue KRW-pegged ￰25￱ voices have urged Seoul to restrict issuance to the commercial banking ￰26￱ progressive opponents say such a move would stifle innovation.