The nominee to lead the Bank of Korea, Shin Hyun-song, has voiced his support for a central bank digital currency, suggesting that it should form the backbone of South Korea's digital money system, with stablecoins playing a supplementary role. In his written remarks, Shin expressed his expectation that central bank digital currencies and deposit tokens can coexist with stablecoins in a competitive and complementary manner. He also emphasized the need for trust in the currency and strict anti-money laundering and compliance controls. Shin proposed introducing a won-based stablecoin, but highlighted the importance of prioritizing trust in the currency.
He views stablecoins as useful for trading tokenized assets and facilitating programmable payments, rather than replacing state-backed money. His proposal is in line with the central bank's existing stance that stablecoin issuance should be led by regulated banks, citing the need for compliance with anti-money laundering and customer verification rules. Shin also expressed skepticism about the potential of blockchain-based coins to improve foreign exchange efficiency, citing regulatory uncertainty and added costs. He noted that digital assets fall short of fulfilling the core functions of money, including serving as a unit of account, a medium of exchange, and a store of value.
The Bank of Korea has warned about the potential risks of privately issued tokens to monetary policy and financial stability, and has called for strict oversight. Shin's remarks come as policymakers debate 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, the country's first fully regulated stablecoin, KRW1, was launched through a partnership between crypto custody service provider BDACS and Woori Bank.