According to Shin Hyun-song, the nominee for the Bank of Korea's leadership, the nation's digital monetary system should be centered around a central bank digital currency and bank-issued deposit tokens, with stablecoins playing a secondary, supplementary role. In his written remarks to parliament, Shin expressed support for introducing a stablecoin pegged to the South Korean won, but underscored the necessity of establishing trust in the currency first.
He views stablecoins as useful for facilitating the trade of tokenized assets and enabling programmable payments, rather than as a replacement for state-backed currency. Shin's proposal is in line with the central bank's stance that stablecoin issuance should be initiated by regulated banks, citing the need for compliance with anti-money laundering and customer verification regulations.
He also raised concerns about the efficiency of blockchain-based coins in foreign exchange, citing regulatory uncertainty and additional costs. Furthermore, Shin noted that digital assets fall short of fulfilling the core functions of money as a unit of account, medium of exchange, and store of value.
The Bank of Korea has previously warned about the potential risks of privately issued tokens to monetary policy and financial stability, advocating for strict oversight. Shin's comments come amidst ongoing debates among policymakers on the extent to which the market should be opened up, with regulators pushing for bank-led models and lawmakers proposing broader frameworks that would allow non-bank issuers under new legislation. Recently, South Korea's first fully regulated stablecoin, KRW1, was launched through a partnership between crypto custody service provider BDACS and Woori Bank.