World's First Attempt: Digital Currency for Government Subsidies

The government is launching the world's first pilot project to disburse electric vehicle charging facility construction subsidies using blockchain-based deposit tokens. Deputy Prime Minister and Minister of Economy and Finance Koo Yun-chul, Minister of Climate, Energy and Environment Kim Sung-hwan, and Bank of Korea Governor Rhee Chang-yong announced on the 19th that they will sign a memorandum of understanding (MOU) for a pilot project on treasury fund execution using digital currency at the Government Complex Seoul on the 24th.

This pilot project targets 30 billion won in subsidies for medium-speed charging facilities (maximum output 30-50kW) under the Ministry of Climate's electric vehicle charging facility construction program. The Korea Environment Corporation, the implementing agency, plans to begin recruiting project participants in May and disburse subsidies to selected operators in deposit tokens from June onward.

Deposit Tokens: 'Programmable Money' That Prevents Fraudulent Claims

Deposit tokens are digital payment instruments issued based on deposits held at banks. The Bank of Korea manufactures, issues, and distributes blockchain-based digital currency for financial institutions, which then issue linked deposit tokens. While similar to cash, the key feature is that usage conditions can be preset.

A Ministry of Economy and Finance official explained, "Deposit tokens are programmable tokens with pre-attached conditions, so payments are simply impossible outside the designated time and usage locations. This is a system that can prevent fraudulent use in advance."

In this pilot project, operators will be restricted to using deposit tokens only at charging equipment retailers and Korea Electric Power Corporation. This is expected to fundamentally block fraudulent subsidy claims and significantly shorten settlement periods.

Business Expense Cards Also Going Digital… Card Fee Savings Expected

The government is also preparing a second pilot project to convert operating expenses such as business promotion costs currently paid by credit card across various ministries to digital currency. A Ministry of Economy and Finance official stated, "With credit cards, inappropriate use can only be detected through post-audits, but deposit tokens can be given conditions on available stores and time periods."

Particularly for merchants such as restaurants receiving deposit tokens, the burden of card fees is expected to virtually disappear. The government plans to expand the system to enable payments at most existing terminals using NFC and QR code methods.

Converting Quarter of Treasury Funds to Digital Currency by 2030

The Bank of Korea verified the viability of digital currency and deposit tokens last year through real transaction tests involving the general public. This pilot project is the first case of applying those results to an actual government program. The World Bank is also known to have proposed cooperation on this project.

Deputy Prime Minister Koo Yun-chul stated, "This agreement will be the starting point for fiscal execution innovation using digital technology," adding, "We aim to convert a quarter of treasury fund execution to digital currency by 2030, and will actively identify digital currency utilization projects through consultations with relevant ministries and meetings with commercial banks."

This year, the government plans to support the installation of approximately 71,450 fast, medium-speed, and slow chargers with a total budget of 545.7 billion won. Medium-speed chargers are a newly established category this year, designed to be suitable for locations where people stay for 2-3 hours, such as large shopping malls or movie theaters.