The nominee to lead the Bank of Korea, Shin Hyun-song, has expressed support for a central bank-led digital currency model, suggesting that it should form the backbone of South Korea's digital monetary system, with stablecoins playing a secondary role. According to Yonhap, Shin stated that he anticipates central bank digital currencies and deposit tokens to coexist with stablecoins in a supplementary and competitive manner.
In his written remarks submitted to parliament, Shin voiced his support for introducing a won-based stablecoin, but stressed that trust in the currency must be established first. He views stablecoins as useful tools for trading tokenized assets and facilitating programmable payments, rather than as a replacement for state-backed currency.
Shin's proposal is in line with the central bank's existing stance that stablecoin issuance should commence with regulated banks, citing compliance requirements such as anti-money laundering and customer checks as reasons to start with established lenders. He also raised concerns about the efficiency of blockchain-based coins in foreign exchange, citing regulatory compliance uncertainty and added costs. Regarding cryptocurrencies, Shin noted that digital assets fail to fulfill the core functions of money as a unit of account, medium of exchange, and store of value.
The Bank of Korea has warned that privately issued tokens could pose risks to monetary policy and financial stability, advocating for strict oversight, including anti-money laundering and customer verification rules. Shin's remarks come as policymakers debate the extent to which the market should be opened, with regulators pushing for bank-led models and lawmakers proposing broader frameworks that would allow non-bank issuers under new legislation. This development follows the launch of the country's first fully regulated stablecoin, KRW1, in February, which was introduced through a partnership between crypto custody service provider BDACS and Woori Bank.