The nominee to lead the Bank of Korea, Shin Hyun-song, has expressed his support for a central bank digital currency and deposit tokens as the foundation of South Korea's digital monetary system. He believes that stablecoins can coexist with these, but in a supplementary and competitive capacity. Shin submitted written remarks to parliament prior to his confirmation hearing, stating that introducing a won-based stablecoin is acceptable, but only if trust in the currency is established first.
He views stablecoins as useful for tokenized asset trading and 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 raised concerns about the efficiency of blockchain-based coins in foreign exchange, citing regulatory compliance uncertainty and added costs.
Furthermore, Shin noted that digital assets lack the core functions of money, including serving as a unit of account, medium of exchange, and store of value. The Bank of Korea has previously warned of the potential risks of privately issued tokens to monetary policy and financial stability, advocating for strict oversight. Shin's remarks come amidst ongoing debates among policymakers on the extent to which the market should be opened, with regulators pushing for bank-led models and lawmakers proposing broader frameworks for non-bank issuers under new legislation.
Recently, the country's first fully regulated stablecoin, KRW1, was launched through a partnership between BDACS and Woori Bank.