The nominee to lead the Bank of Korea, Shin Hyun-song, has expressed his support for a central bank digital currency, suggesting that it, along with bank-issued deposit tokens, should be the foundation of South Korea's digital monetary system, with stablecoins playing a secondary role. According to Yonhap, Shin stated that he expects 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 emphasized the importance of trust in the currency and proposed introducing a won-based stablecoin. However, he also stressed that stablecoins should be used for specific purposes, such as trading tokenized assets and enabling programmable payments, rather than replacing state-backed currency.
Shin's proposal is in line with the central bank's existing stance that stablecoin issuance should be led by regulated banks, citing compliance demands such as anti-money laundering and customer checks. He also expressed skepticism about the potential of blockchain-based coins to improve foreign exchange efficiency, citing regulatory compliance and added costs as concerns. 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 potential risks of privately issued tokens to monetary policy and financial stability, advocating for strict oversight, including anti-money laundering and customer verification rules. Shin's comments 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.