New Bank of Korea Governor Emphasizes CBDCs and Bank Tokens, Omitting Stablecoins in Key Speech

In his inaugural address, Bank of Korea Governor Shin Hyun-song highlighted the importance of central bank-issued digital currencies and tokens issued by banks, while notably excluding stablecoins from his discussion, as South Korea considers new regulations for the crypto sector. Shin, who commenced his four-year term, referenced the bank's ongoing pilot projects, including the retail central bank digital currency and deposit token initiative known as Project Hangang, as well as its participation in Project Agorá, a cross-border tokenization effort led by the Bank for International Settlements, as reported by Chosun. He positioned digital currency as a key component of a broader evolution in central banking, particularly during a period marked by economic challenges and slower growth within the country. The omission of stablecoins from his remarks was conspicuous, given the significant attention this issue has received in policy discussions in Seoul, where lawmakers are considering the Digital Asset Basic Act, which aims to establish guidelines for the issuance of stablecoins. Previously, Shin had suggested to lawmakers that stablecoins could coexist with central bank digital currencies and bank-issued tokens in a complementary and competitive manner. His speech outlined a model where the central bank would issue a digital currency, and commercial banks would provide tokens that are fully convertible into it, with Shin advocating for any stablecoin issuance to originate from regulated banks. In addition to payments, Shin indicated that the central bank would undertake closer scrutiny of cryptocurrency markets and non-traditional financial institutions, expanding its monitoring of cryptocurrencies and other non-conventional assets, and seeking greater access to data to assess financial risks. Shin also committed to taking steps to modernize currency markets, including the introduction of 24-hour foreign exchange trading and an offshore settlement system for the Korean won.