The Bank of Korea (BOK) has created a dedicated asset tokenization unit as part of its Digital Currency Office, according to a report by Korean financial outlet E-Daily. The goal is to work on the tokenization of Korean government bonds using the unified ledger, Korea’s Digital Currency System (DCS), that also hosts the CBDC and tokenized deposits that are part of Project Hangang (Han River). This is not the first time the Bank of Korea has spoken about tokenizing government bonds.
During the ECB Forum last month, the BOK released a paper on Project Hangang, with the tokenization of government bonds as an area to be explored. Rather than viewing government bonds in isolation, hosting tokenized wholesale CBDC and government bonds on the same ledger enables many central bank activities.
That paper gave a nod to the BIS work on Project Pine with the Federal Reserve Bank of New York, where simulations showed how tokenization, including tokenized Treasuries, could enable the automation of some central bank operations such as automated margin calls, calculation of haircuts and the execution of repo and collateralized lending. Ultimately this could make 24/7 central bank activities viable and also support a faster response to crises.
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