According to Shin Hyun-song, the nominee to head the Bank of Korea, a central bank digital currency and bank-issued deposit tokens should be the foundation of South Korea's digital monetary system, with stablecoins serving a supplementary purpose. He stated that he anticipates central bank digital currencies and deposit tokens will coexist with stablecoins in a competitive and complementary manner. Shin voiced his support for introducing a won-based stablecoin, but stressed 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.
His proposal is in line with the central bank's existing stance that stablecoin issuance should be initiated by regulated banks, citing compliance requirements such as anti-money laundering and customer verification as key reasons. Shin also expressed skepticism about the potential of blockchain-based coins to enhance foreign exchange efficiency, citing regulatory uncertainty and increased costs. Furthermore, he 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 cautioned that privately issued tokens may pose risks to monetary policy and financial stability, advocating for strict oversight, including anti-money laundering and customer verification rules. Shin's comments come amid ongoing debates among policymakers about the extent to which the market should be opened up. While regulators have pushed for bank-led models, lawmakers have proposed more comprehensive frameworks that would allow non-bank issuers under new legislation. Notably, South Korea's first fully regulated stablecoin, KRW1, was launched in February through a partnership between crypto custody service provider BDACS and Woori Bank.