The nominee to head the Bank of Korea, Shin Hyun-song, has expressed his support for a central bank digital currency (CBDC) and deposit tokens issued by banks, suggesting that these should be the foundation of South Korea's digital monetary system, with stablecoins playing a secondary role. According to Yonhap, Shin stated that he expects CBDCs and deposit tokens to coexist with stablecoins in a supplementary and competitive manner.
In his written remarks to parliament, Shin voiced his support for introducing a stablecoin based on the won, but emphasized the need for trust in the currency to come first. He views stablecoins as useful for trading tokenized assets and facilitating 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 commence with regulated banks, citing compliance requirements such as anti-money laundering and customer checks.
He also expressed skepticism about the claim that blockchain-based coins can improve foreign exchange efficiency, citing regulatory compliance uncertainty and added costs. Shin noted that digital assets fail to fulfill the core functions of money as a unit of account, medium of exchange, and store of value. The Bank of Korea has warned of the risks posed by privately issued tokens to monetary policy and financial stability, advocating for strict oversight, including anti-money laundering and customer verification rules. Shin's comments come as policymakers debate 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.
Notably, the country's first fully regulated stablecoin, KRW1, was launched in February through a partnership between crypto custody service provider BDACS and Woori Bank.