The Bank of Korea's nominee, Shin Hyun-song, has expressed his support for a central bank-led digital currency, suggesting that it should form the foundation of South Korea's digital monetary system, with stablecoins playing a subordinate role. According to Yonhap, Shin stated that central bank digital currencies and deposit tokens can 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 primarily for trading tokenized assets and enabling programmable payments, rather than as a replacement for state-backed currency.
Shin's proposal aligns with the central bank's existing 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 improve foreign exchange efficiency, citing regulatory uncertainty and added costs.
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 that privately issued tokens could pose risks to monetary policy and financial stability, advocating for strict oversight and regulations. Shin's remarks come amidst 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 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.