What to know:
- Shin said tokenized bonds can simplify debt issuance and reduce management errors.
- Bank of Korea tokenized bonds could link bonds, wholesale CBDCs, and bank deposits.
- BIS said tokenization may lower settlement risk and improve overall market efficiency.
Bank of Korea tokenized bonds drew support from Governor Hyun Song Shin at the ECB Forum on Central Banking in Portugal. Shin said tokenization can simplify government debt issuance and reduce errors in bond management during a Wednesday panel discussion.
Tokenized bonds would enable easier verification of collateral according to Shin. Moreover, tokenized bonds would be helpful in crediting accounts and reversing any transactions if needed.
“The big prize is tokenizing government bonds,” Shin stated. Tokenization makes the process simpler and with fewer mistakes when everything is tokenized.
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Bank of Korea Tokenized Bonds Link to Project Hangang
Bank of Korea tokenized bonds are part of a bigger strategy for digital finance. Shin has described plans for tokenized government bonds, wholesale CBDCs, and tokenized deposits from commercial banks on a single ledger.
The strategy will expand “Project Hangang.” The Bank of Korea-driven pilot project involves a wholesale CBDC system based on blockchain technology for financial transactions.
Tokenized government bonds have an important role to play in the RWA marketplace. According to RWA.xyz, US Treasury bonds are the most tokenized RWA class with $14.6 billion, accounting for 46% of the total RWA marketplace, which is worth $31.7 billion.
Bank of Korea tokenized bonds also represent central bank concern about market efficiency. According to the Bank for International Settlements report of July 2025, tokenization of government bonds may serve innovation if related regulation and infrastructure problems are solved.
BIS Report Highlights Tokenized Bond Market Benefits
The BIS report said government securities remain a key part of global financial markets. They work as savings tools for households and corporations as well as collateral assets in numerous transactions.
Bank of Korea tokenized bonds fit this discussion because of their use in contingent execution. BIS noted that such property can decrease settlement risk, increase market efficiency, widen access to investments, and facilitate innovations in finance.
BIS’ report is an additional source to analyze Bank of Korea tokenized bonds. BIS analyzed 39 tokenized bonds, 24 of which were corporate and 15 were government bonds.
The report shows suggestive results of the reduction of bid-ask spreads. It also demonstrates equal issuance costs and yield compared with traditional bonds.
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