The nominee for the Bank of Korea, Shin Hyun-song, has expressed his support for a central bank digital currency, suggesting that it should be the foundation of South Korea's digital monetary system, with stablecoins serving a secondary purpose. In his written remarks to parliament, Shin stated that he envisions a system where central bank digital currencies and deposit tokens coexist with stablecoins in a complementary and competitive manner. He also emphasized the importance of trust in the currency and proposed introducing a won-based stablecoin, while stressing that stablecoins should be used for specific purposes such as trading tokenized assets and enabling programmable payments, rather than replacing traditional currency.
Shin's proposal aligns with the central bank's stance that stablecoin issuance should be led by regulated banks, citing the need for compliance with anti-money laundering and customer verification regulations. He also expressed skepticism about the potential of blockchain-based coins to improve foreign exchange efficiency, citing regulatory uncertainty and added costs. Furthermore, Shin 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 previously warned about the risks posed by privately issued tokens to monetary policy and financial stability, and has advocated 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 up, with regulators pushing for bank-led models and lawmakers proposing broader frameworks that would allow non-bank issuers under new legislation.