Bank of Korea Creates Task Force for Government Bond Tokenization

The Bank of Korea has set up a dedicated unit to issue and circulate government bonds as digital tokens. Government bond tokenization refers to converting bonds into blockchain-based digital assets for trading, and the move signals that the central bank's digital currency (CBDC) project has entered a practical implementation phase.

According to data submitted by the Bank of Korea to Rep. Lee Jong-wook of the People Power Party, a member of the National Assembly's Strategy and Finance Committee, on the 26th, the central bank last month created the three-member Asset Tokenization Team under its Digital Currency Office. The reorganization is part of the first structural overhaul carried out by BOK Governor Rhee Hean-song about four months after taking office. The Asset Tokenization Team is a working-level unit that plans projects to tokenize financial assets such as government bonds based on CBDC and studies related policies and regulations. It is tasked with reviewing ways to issue and circulate government bonds in digital token form.

Governor Rhee stressed the need for government bond tokenization at the European Central Bank (ECB) forum held in Sintra, Portugal, on July 1. "If government bonds are issued and circulated directly within a digital currency system, a series of processes—from verifying collateral eligibility to redemption at maturity—can be automated through smart contracts," he explained. Governor Rhee laid out a vision for linking issuance, distribution, settlement, and redemption processes within digital infrastructure through bond tokenization, thereby improving efficiency across the financial system.

Meanwhile, the second phase of Project Han River, which the Bank of Korea is pursuing, is set to begin in earnest in the second half of this year.