South Korea Tests Blockchain-Based Payment System for Government Officials
The South Korean government has approved a pilot program to let public officials pay certain operating expenses using blockchain-based deposit tokens instead of physical cards. The six banks participating in the trial are KB Kookmin Bank, NH NongHyup Bank, Shinhan Bank, Woori Bank, Industrial Bank of Korea, and Hana Bank.
The pilot program is part of Project Hangang, the Bank of Korea's digital money program. Under this system, commercial banks issue deposit tokens that represent bank deposits, while the wholesale CBDC is used only for settlement between financial institutions, not for direct consumer spending.
Transactions are processed on blockchain infrastructure, allowing payment and settlement to happen at the same time. Officials can also set rules in advance to block spending in categories that government rules do not allow, which should make it easier to track how government money is spent.