The Bank of Korea's nominee, Shin Hyun-song, has expressed support for a central bank digital currency, suggesting that it and bank-issued deposit tokens should be the foundation of South Korea's digital currency system. According to Shin, stablecoins can coexist with these currencies in a supplementary and competitive manner. He noted that trust in the currency is essential, particularly for a won-based stablecoin. Shin views stablecoins as useful for tokenized asset trading and programmable payments, rather than as a replacement for state-backed currency.
He aligns with the central bank's stance that stablecoin issuance should start with regulated banks due to compliance requirements such as anti-money laundering and customer checks. Shin also questioned the potential of blockchain-based coins to improve foreign exchange efficiency, citing regulatory compliance uncertainty and added costs. Furthermore, he stated that digital assets do not fulfill the core functions of money as a unit of account, medium of exchange, and store of value. The Bank of Korea has previously warned that privately issued tokens could pose risks to monetary policy and financial stability, advocating for strict oversight.
Shin's comments come amid debates on market regulation, with policymakers considering the extent to which the market should be opened up. While regulators have pushed for bank-led models, lawmakers have proposed broader frameworks that would allow non-bank issuers under new legislation.
Recently, South Korea's first fully regulated stablecoin, KRW1, was launched through a partnership between BDACS and Woori Bank.