The nominee to lead the Bank of Korea, Shin Hyun-song, has outlined his vision for South Korea's digital money system, prioritizing a central bank digital currency and bank-issued deposit tokens, with stablecoins serving a supplementary function. In his written remarks, Shin expressed support for introducing a won-based stablecoin, but stressed that establishing trust in the currency is paramount.
He views stablecoins as useful for specific applications, such as trading 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 led by regulated banks, citing the need for compliance with anti-money laundering and customer verification requirements. He also raised questions about the potential of blockchain-based coins to improve foreign exchange efficiency, citing regulatory uncertainties and added costs. Additionally, Shin noted that digital assets fall short of fulfilling the core functions of money, including serving as a unit of account, medium of exchange, and 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 advocating for bank-led models and lawmakers proposing broader frameworks that would allow non-bank issuers under new legislation.