The nominee to lead the Bank of Korea, Shin Hyun-song, has outlined a vision for South Korea's digital monetary system, where central bank digital currencies and bank-issued deposit tokens form the foundation, with stablecoins playing a secondary, supplementary role. In remarks submitted to parliament, Shin expressed support for introducing a won-based stablecoin, but underscored the need for trust in the currency to be established first. He views stablecoins as useful for facilitating the trade of 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 initiated by regulated banks, citing compliance requirements such as anti-money laundering and customer checks.
He also expressed skepticism regarding the potential of blockchain-based coins to enhance foreign exchange efficiency, citing regulatory compliance uncertainty and added costs. Furthermore, Shin noted that digital assets fall short of fulfilling the core functions of money as a unit of account, medium of exchange, and store of value. The Bank of Korea has previously warned of the risks posed by 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 amid ongoing debates among policymakers regarding the extent to which the market should be opened up, with regulators pushing for bank-led models and lawmakers proposing broader frameworks that would permit 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.