South Korea to Pilot Digital Currency Subsidies With Six Major Banks

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By BlockFlowSep 08, 2025

South Korea’s central bank and government plan to pilot digital currency for distributing over KRW 100 trillion in subsidies, with six major banks expressing interest. The project aims to use blockchain to prevent misuse and improve oversight, while discussions on a won-denominated stablecoin continue cautiously.

The Bank of Korea, together with the government, is preparing to launch a pilot program that will distribute government subsidies in the form of digital currency. Six major commercial banks — KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup, and the Industrial Bank of Korea — have expressed interest in participating.

The project will leverage blockchain technology to pre-program the scope and expiration dates of subsidies, ensuring they are not misused or diverted for other purposes. By doing so, authorities aim to improve oversight and enable more accurate evaluations of subsidy effectiveness.

The central bank plans to hold an information session in mid-September to outline the testing schedule and requirements. If preparations proceed smoothly, the pilot could officially begin in the first half of 2025.

At the same time, the Bank of Korea is also engaging with academia and industry stakeholders on the topic of a won-denominated stablecoin. However, the central bank has adopted a cautious stance amid ongoing policy debates about potential legal frameworks.

Bank of Korea Governor Lee Chang-yong has emphasized that a stablecoin backed by the Korean won is necessary to add programmable features to money. He suggested it should first be issued through banks and gradually expanded, while lawmakers continue to debate whether non-bank issuers should also be permitted.

South Korea subsidy bank