National Treasury Subsidies to Be Paid with "Deposit Tokens"... Government Launches World's First Digital Execution Experiment (Comprehensive)

Koo Yoon-chul, Deputy Prime Minister and Minister of Economy and Finance, is delivering opening remarks at the expanded macroeconomic and financial meeting held at the Bankers' Hall in Jung-gu, Seoul on March 19, 2026. Photo by Yoon Dongju

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The government is embarking on a world-first experiment by introducing blockchain-based "deposit tokens" in the execution of government subsidies. With the launch of digital currency-based fiscal execution starting with the electric vehicle charging infrastructure project, a fundamental shift in the subsidy payment and settlement system-dubbed the "digital transformation of fiscal management"-is expected to accelerate.

According to the government on March 19, Koo Yoon-chul, Deputy Prime Minister and Minister of Economy and Finance, Kim Sunghwan, Minister of Climate, Energy and Environment, and Rhee Changyong, Governor of the Bank of Korea, are scheduled to sign a memorandum of understanding (MOU) at the Government Complex Seoul on March 24 to carry out a pilot project for the execution of government funds using digital currency.

The core of this project is to use central bank digital currency (CBDC) and deposit tokens to transition the payment and settlement of government subsidies to a blockchain-based system. Previously, cash was transferred from the consolidated treasury account to each government ministry’s account and then to subsidy project operators. Going forward, programmable digital tokens will be paid directly instead of cash.

Digital currency refers to a blockchain-based digital form of legal tender issued by the central bank, while deposit tokens are digital payment instruments issued based on bank deposits. Although the Bank of Korea has previously conducted real-world tests with the public, this is the first time such digital currency is being applied to a national fiscal project.

The pilot project will focus on the Climate Ministry's "electric vehicle charging facility construction project," specifically targeting medium-speed charging stations (with a maximum output of 30-50kW and a total budget of 30 billion won). The Korea Environment Corporation, as the subsidy project operator, will announce an open call for project participants in May, select the operators in June, and then provide subsidies in the form of deposit tokens.

An official from the Ministry of Economy and Finance stated, "This is the first case of applying digital currency to the execution of fiscal funds for this year’s budget," and added, "Actual implementation will begin in May."

The key feature of using deposit tokens is "conditional use." By applying smart contracts to the tokens, the intended use and time period can be pre-set, fundamentally blocking any usage outside of the subsidy’s intended purpose. For example, subsidies for electric vehicle chargers can be set so that they may only be used for specific suppliers involved in charger sales and installation, or for payments to Korea Electric Power Corporation.

In contrast to the previous system, which relied on post-audit detection of misuse, this new approach makes improper use structurally impossible from the outset. The official explained, "Rather than cash moving, it’s the concept of programmable tokens being transferred," adding, "This could greatly enhance the transparency and efficiency of fiscal execution."

In particular, deposit tokens could potentially transform the existing payment system itself. Users will be able to pay via a smartphone-based electronic wallet without a physical card, storing deposit tokens from their bank to use as needed. The Ministry of Economy and Finance official noted, "Rather than a credit card, it’s essentially an immediate payment method similar to a debit card," and added, "From the merchant's perspective, it could also eliminate card fees." The system is being designed to support various payment methods, including not only NFC but also QR codes, so that it can be used at most merchant locations.

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The reason the electric vehicle charging infrastructure was selected for this pilot project is due to the "clear restriction on usage." Since subsidies for chargers are only permitted for limited purposes such as charger sales, installation, and payments to Korea Electric Power Corporation, the authorities determined that this scenario is suitable for verifying the effectiveness of conditional tokens. The official said, "We selected the pilot project through consultation with relevant ministries," adding, "Because the scope of use in the charger installation project is limited, it is well-suited for verifying the effectiveness of deposit tokens."

In fact, there have been some cases of improper receipt of subsidies in past electric vehicle charger projects, and the 2025 inspection by the Office for Government Policy Coordination reportedly uncovered some problematic cases. With the introduction of deposit tokens, the possibility of such improper receipt is structurally blocked. Since subsidies are provided as conditional tokens rather than cash, it becomes fundamentally impossible for third parties, such as apartment residents’ representative councils, to use them for other purposes.

The system is also being designed to minimize any additional burden on merchants. Addressing concerns about "mandatory electronic wallet adoption," the government plans to expand by leveraging the existing financial infrastructure. The Ministry of Economy and Finance official explained, "Currently, deposit tokens are not being applied to business promotion funds or similar expenses during this pilot phase, but we are building a payment platform with the participation of major commercial banks in preparation for future expansion." He added, "Once the platform is ready, it will enable merchants to use it without additional burden, and we can further expand the program through additional pilot projects."

The government is also considering applying deposit tokens to business promotion expenses and other operating costs of administrative offices. By pre-setting the types of industries and time periods in which expenditures can occur, spending at inappropriate times or in improper sectors-such as late at night-can be fundamentally blocked. All flows in the fiscal execution process will be recorded on the blockchain. However, when a public official uses business promotion expenses, transaction records will indicate where and how much was spent, but the system is not designed to track usage in the private sector after that point.

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The government plans to use this pilot project as a starting point to gradually expand digital currency-based fiscal execution. The goal is to convert 25% of all government fund executions to digital currency by 2030. Deputy Prime Minister Koo stated, "This agreement will mark the starting point of fiscal execution innovation using digital technology," and continued, "Our goal is to convert one quarter of government fund executions to digital currency by 2030, and we will actively discover and expand related projects."

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