The nominee to head the Bank of Korea, Shin Hyun-song, has expressed his support for a digital currency system centered around a central bank digital currency and bank-issued deposit tokens, with stablecoins playing a supplementary role. According to Yonhap, Shin stated that he expects central bank digital currencies and deposit tokens to coexist with stablecoins in a competitive and complementary manner. In his written remarks to parliament, Shin voiced his support for introducing a won-based stablecoin, but emphasized that trust in the currency must be established first.
He views stablecoins as useful for trading tokenized assets and facilitating programmable payments, rather than replacing 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 the need for compliance with anti-money laundering and customer verification regulations. He also expressed skepticism about 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, medium of exchange, and store of value.
The Bank of Korea has previously warned about the risks posed by privately issued tokens to monetary policy and financial stability, advocating for strict oversight and regulatory compliance. 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.
This development follows the launch of South Korea's first fully regulated stablecoin, KRW1, in February, which was introduced through a partnership between crypto custody service provider BDACS and Woori Bank.