A key leap toward the internationalization of the Korean won: The Bank of Korea launches a trial run of its 24/7 international settlement system, with full deployment set for January next year.

According to Zhisheng Finance APP, the Bank of Korea officially launched the trial run of the “BOK Won International Payment Network” on Monday local time. This is the Bank of Korea’s first payment and settlement network that operates 24 hours a day, except on weekends and public holidays. It is also regarded as a key step for South Korea in promoting the internationalization of the Korean won and facilitating overseas investors’ participation in won trading and settlement, laying the foundation for further opening the local market to foreign investors next year.

The Bank of Korea stated in a release that the trial run began at 9:00 a.m. on the 21st. Four domestic Korean commercial banks are participating in the pilot: KB Kookmin Bank, Woori Bank, Hana Bank, and Shinhan Bank. Around 9:30 a.m. on the same day, two of the domestic participating institutions completed the first trial transaction, involving approximately 1.4 billion won (about 1 million US dollars).

The Bank of Korea also stated that foreign banks will join the system, though the timing for their participation during the trial phase has not yet been determined. According to the plan, the system will be fully operational from January next year, at which time major foreign banks are expected to join.

The purpose of this settlement network is to enable overseas investors and non-residents to trade the won more freely. Through this system, overseas investors do not need to use Korean domestic financial institutions; by opening an account in a Registered Foreign Institution for Won Transactions (RFI-K) set up overseas, they can settle directly in won during their own business hours.

The Bank of Korea pointed out that this is its first time operating a payment and settlement network that runs 24 hours every day apart from weekends and public holidays. The Bank of Korea expects the establishment of this network will significantly improve the convenience for foreign investors accessing won-denominated payment infrastructure and help enhance the international status of the Korean won.

This trial run is part of the Korean government’s roadmap for the internationalization of the won announced earlier this year. The Korean government released relevant measures aimed at opening South Korea’s foreign exchange market to global investors and seeking an upgrade of Korean stocks to developed market status by MSCI.

Previously, South Korea had already promoted the extension of foreign exchange market trading hours. In July this year, onshore US dollar/Korean won trading shifted to a 24-hour arrangement. Starting from January next year, overseas investors will be allowed to trade, transfer, and settle won between themselves outside of Korea. The international won settlement network launched this time is a key component of this plan.

According to the arrangement, the system will undergo a trial operation of around three months. The Bank of Korea stated that it will continuously monitor the system to ensure stable operations, and, through institutional and system improvements as well as expanding participating institutions, contribute to the development of South Korea’s payment and settlement infrastructure.