The image is unrelated to this article. [Herald DB]
The image is unrelated to this article. [Herald DB]

The Bank of Korea said Tuesday it has finalized the official name of its offshore won settlement system, set for launch in January next year, as the "Bank of Korea Won International Settlement Network" — or BOK International Network — and plans to conduct a pilot run in September.

The BOK International Network is infrastructure designed to allow won to be transacted as freely as dollars — much like Koreans can open dollar accounts at domestic banks and transfer dollars among themselves. The system will operate around the clock on business days, excluding weekends and public holidays, starting in January next year.

The network is part of the government's broader "won internationalization" initiative, which aims to create an environment where foreigners can procure and use the won offshore without restriction.

The Bank of Korea expects the system will allow foreign investors to settle won transactions during their own local business hours, regardless of time zone differences, improving the convenience of managing and deploying won-denominated funds. The central bank also anticipates the network will boost global demand for the won and help stabilize the exchange rate. Over the longer term, the initiative is designed to lift the country's potential growth rate — the government has previously set a target of raising it from the current mid-1 percent range to 3 percent.

Lee Hyeong-ryeol, director general of the international finance bureau at the Ministry of Economy and Finance, said Thursday that the system means "Americans in the United States will be able to open won accounts at US banks in New York." He added that offshore won settlement institutions — referring to US banks based in New York — would operate under a registration system rather than a licensing regime. "Right now, if a foreigner wants to invest in won-denominated shares or government bonds, they cannot exchange currency during their daytime hours, which is nighttime in Korea," he said. "Removing that restriction is the core of won internationalization."

Four major commercial banks — KB Kookmin, Woori, Hana and Shinhan Bank — are expected to participate in the pilot. The Bank of Korea said it is already conducting preparatory work with the participating institutions.

The central bank also said it is on track to complete revisions to related regulations, including its payment and settlement system operating rules, by August.

The Bank of Korea said the network will improve foreign investors' access to won settlement infrastructure and is expected to contribute positively to South Korea's potential inclusion in the MSCI (Morgan Stanley Capital International) developed-market index.

The government's won internationalization roadmap also includes plans to establish rules allowing foreign financial institutions to procure won for settlement and other purposes through short-term borrowing without restriction. A second-phase option — under which the Bank of Korea or the government's foreign exchange stabilization fund would supply liquidity — is also under review. The roadmap further calls for easing foreign exchange regulations on foreign investors and building a digital asset settlement infrastructure.

Bank of Korea Governor Shin Hyun-song has repeatedly emphasized won internationalization. At his inauguration in April, he called it "an important task to build monetary infrastructure befitting the status of our economy," citing the need for a 24-hour foreign exchange market and an offshore won settlement system.


kimstar@heraldcorp.com