A Key Leap for Won Internationalization: Bank of Korea Launches Pilot Run of 24/7 International Settlement System, Full Launch Set for January Next Year

The Bank of Korea officially launched the pilot run of the "BOK Won International Payment Network" on Monday local time. This is the Bank of Korea's first payment and settlement network operating 24 hours a day, excluding weekends and public holidays, and is also seen as a key step for South Korea in promoting the internationalization of the won, facilitating overseas investors' participation in won-denominated transaction settlement, and laying the foundation for opening the local market to foreign investors to a greater extent next year. The Bank of Korea said in a statement that the pilot run began at 9 a.m. on the 21st. The four South Korean domestic commercial banks participating in the pilot include Kookmin Bank, Woori Bank, Hana Bank, and Shinhan Bank. At around 9:30 that day, two domestic participating institutions completed the first test transaction, amounting to about 1.4 billion won (about $1 million). The Bank of Korea also said that foreign banks will also join this system, but the specific timing of their participation during the pilot phase has not yet been determined. According to the plan, the system will be fully operational in January next year, and major foreign banks are expected to join by then. This settlement network is intended to allow investors outside South Korea and overseas non-residents to trade the won more freely. Through this system, overseas investors do not need to go through South Korean domestic financial institutions. They only need to open an account at a "Registered Foreign Institution for Won Transactions" (RFI-K) established overseas to directly settle in won during their home country's business hours. The Bank of Korea pointed out that this is the first time the Bank of Korea has operated a payment and settlement network that runs 24 hours a day, excluding weekends and public holidays. The Bank of Korea expects that the establishment of this settlement network will significantly improve the convenience for foreign investors in accessing won-denominated payment infrastructure and help enhance the international status of the won. The pilot run is part of the won internationalization roadmap announced by the South Korean government this year. The South Korean government announced related measures this year aimed at opening South Korea's foreign exchange market to global investors and seeking MSCI's upgrade of South Korean stocks to developed market status. Previously, South Korea had already pushed to extend foreign exchange market trading hours. In July this year, onshore USD/KRW trading shifted to a 24-hour trading arrangement. Starting in January next year, overseas investors will be allowed to trade, transfer, and settle won among themselves outside South Korea. The won international settlement network launched this time is an important part of this plan. Under the arrangement, the system will undergo a pilot run of about three months. The Bank of Korea said it will continuously monitor the system to ensure its stable operation, while contributing to the development of South Korea's payment and settlement infrastructure through institutional and system improvements and by expanding participating institutions.