South Korea's central bank introduces round-the-clock won transaction settlement pilot program
Foreign investors will gain the ability to process won-denominated transactions during their local business hours through the Bank of Korea's innovative settlement system.
South Korea's central banking authority, the Bank of Korea (BOK), has initiated a trial run of its inaugural round-the-clock won settlement system, designed to enable international investors to process won-denominated transactions beyond the traditional banking hours observed in South Korea.
The central bank announced on Monday that its international wire transfer system commenced pilot operations in partnership with four local banking institutions: KB Kookmin Bank, Woori Bank, Hana Bank and Shinhan Bank. Complete operational deployment is planned for January 2027, at which point the initiative is anticipated to broaden its reach to include additional institutions and international banking entities.
The settlement system will maintain continuous operations around the clock, with exceptions for weekends and recognized public holidays. International investors will gain the capability to process won-denominated transactions during their respective countries' working hours through accounts maintained with Registered Foreign Institutions for KRW Business, or RFI-Ks, eliminating the requirement to establish direct accounts with South Korean financial institutions.
According to the BOK, the network is anticipated to bolster the international prominence of the won by enhancing foreign investors' accessibility to won settlement infrastructure and streamlining transaction processes.
The monetary authority has additionally conducted trials with tokenized settlement systems through its participation in Project Agorá, an initiative spearheaded by the Bank of International Settlements. This collaborative project successfully concluded real-value cross-border payment testing in July utilizing tokenized central bank reserves and commercial bank deposits, with the won included among the currencies tested.
The BOK is simultaneously progressing with Project Hangang, a blockchain-powered pilot program that employs a wholesale central bank digital currency (CBDC) for the settlement of tokenized commercial bank deposits, representing another frontier in the modernization of South Korea's financial infrastructure.