The nominee to head the Bank of Korea, Shin Hyun-song, has expressed his support for a central bank digital currency, suggesting that it and bank-issued deposit tokens should be at the forefront of South Korea's digital monetary system, with stablecoins playing a more limited role. According to Yonhap, he stated that he anticipates these digital currencies and deposit tokens to coexist with stablecoins in a supplementary and competitive manner. Shin emphasized the need for trust in the currency and proposed introducing a won-based stablecoin, while also stressing that stablecoins should be used for specific purposes such as trading tokenized assets and facilitating programmable payments, rather than replacing state-backed currency.
His proposal is in line with the central bank's existing stance that stablecoin issuance should be initiated by regulated banks, citing the need for compliance with anti-money laundering and customer verification requirements. Shin also expressed skepticism about the potential of blockchain-based coins to improve foreign exchange efficiency, due to regulatory compliance uncertainties and added costs. Furthermore, he noted that digital assets fail to fulfill the fundamental roles of money as a unit of account, medium of exchange, and store of value.
The Bank of Korea has previously warned about the risks posed by privately issued tokens to monetary policy and financial stability, advocating for strict oversight. Shin's remarks come at a time when policymakers are debating 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.