South Korea is launching several major financial and banking initiatives in 2024-2025, including a central bank digital currency pilot and reforms to its foreign exchange market. These developments are part of the country’s broader push toward digital transformation, which includes the recent nationwide rollout of mobile resident registration cards.
The Bank of Korea (BOK) has announced plans to launch a pilot test for its digital currency “Hangang” beginning in April 2025. The pilot will involve 100,000 participants who will be able to convert traditional bank deposits into the digital currency. Users can spend the currency at partner merchants including Ediya Coffee, Kyobo Bookstore, and 7-Eleven, as well as e-commerce platforms like Hyundai Home Shopping, with transactions capped at 500,000 won (approximately $690) per user. The pilot involves collaboration with major Korean banks including KB Kookmin, Shinhan, and Hana, which are already implementing digital identification capabilities in their mobile apps.
The Financial Services Commission (FSC) has introduced measures to strengthen savings banks, including easing M&A regulations and modifying loan classification rules. The commission will establish a fund exceeding 1 trillion won to assist savings banks in managing non-performing loans. The changes come as savings banks recorded losses of 397 billion won in 2024, following a 575 billion won loss the previous year, despite asset growth reaching 120.9 trillion won by year-end.
In the open banking sector, the FSC has launched initiatives to expand market access and promote competition. The program has reached 5.51 million registered accounts and is integrating mobile wallet services like Kakao Pay and Alipay HK. The expansion builds upon South Korea’s existing digital identity infrastructure, which includes the MyID Alliance blockchain authentication platform used by major financial institutions.
The government’s 2025 economic policy includes foreign exchange market reforms designed to increase openness and competitiveness. Starting July 2024, foreign financial institutions will be permitted to participate in the onshore FX market, and trading hours will extend from 15:30 to 2:00 the following day (KST).
Separately, South Korea was added to the U.S. Department of Energy’s list of sensitive countries for energy cooperation in January 2024. The designation followed an incident involving a contractor attempting to transport sensitive nuclear reactor design software information to South Korea.
Sources: Evrimagaci, Yonhap News, FinTech Futures, Ministry of Economy and Finance, Financial Post
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