South Korea's Central Bank Governor Emphasizes CBDCs and Bank Tokens in Inaugural Address

In his maiden speech, Bank of Korea Governor Shin Hyun-song highlighted the importance of central bank digital currencies and bank-issued tokens, omitting any reference to stablecoins as the country considers new cryptocurrency regulations. Shin, who assumed office on Tuesday, emphasized the bank's ongoing pilot projects, including the retail CBDC and deposit token initiative, Project Hangang, and its participation in the cross-border tokenization effort, Project Agorá, led by the Bank for International Settlements. He positioned digital currency as a key component of the central bank's broader strategy amidst economic challenges and slowing domestic growth. Notably, Shin's speech did not mention stablecoins, a topic that has been at the forefront of policy discussions in Seoul, with lawmakers deliberating on the Digital Asset Basic Act, which aims to establish guidelines for stablecoin issuance. Previously, Shin had suggested that stablecoins could coexist with CBDCs and deposit tokens in a complementary and competitive manner. His address outlined a bank-led model, where the central bank would issue a CBDC, and commercial banks would provide deposit tokens that can be fully converted into the CBDC. Shin has argued that stablecoin issuance should be initiated by regulated banks. In addition to payments, Shin indicated that the central bank would increase its scrutiny of cryptocurrency markets and non-traditional financial institutions, expanding its monitoring of cryptocurrencies and other non-traditional assets, and seeking greater access to data to track financial risks. Furthermore, Shin pledged to modernize currency markets, including the introduction of 24-hour foreign exchange trading and an offshore won settlement system.