Bank of Korea Governor Highlights Tokenized Government Bonds as Key Target for Market Efficiency

Bank of Korea Governor Hyun Song Shin said tokenizing government bonds could simplify issuance and management while reducing operational errors, citing benefits for collateral verification and transaction processing. According to Cointelegraph, Shin made the remarks during a Wednesday panel discussion at the European Central Bank (ECB) Forum on Central Banking in Sintra, Portugal, where he described tokenized bonds as easier to manage because key steps—verifying collateral, crediting an asset provider’s account, and reversing transactions at the appropriate time—can be handled more directly on tokenized systems. Shin called government bond tokenization “the big prize,” adding that having everything tokenized would be “much easier” and “much less prone to mistakes.” Data from RWA.xyz cited in the report shows US Treasury debt as the largest tokenized real-world asset category, representing $14.6 billion, or about 46% of the $31.7 billion RWA market. Shin also outlined plans to place tokenized government bonds, wholesale central bank digital currencies, and tokenized commercial bank deposits on a unified ledger as part of an extension to Project Hangang, a Bank of Korea-led pilot testing a blockchain-based wholesale CBDC system. Separately, a July 2025 report by the Bank for International Settlements (BIS) said government bond tokenization could improve market efficiency and support financial innovation if regulatory and infrastructure challenges are addressed. The BIS noted that government securities are widely used as savings instruments and as collateral across transactions, and said tokenization can enable contingent execution of actions that may reduce settlement risk, broaden investment access, and encourage new financial services. The report reviewed 39 tokenized bonds—24 issued by corporations and 15 by governments—and found “suggestive evidence” of lower bid-ask spreads versus conventional bonds, alongside comparable issuance costs and yields.