South Korea's Central Bank Governor Emphasizes CBDCs and Bank-Issued Tokens

In his inaugural address, Bank of Korea Governor Shin Hyun-song highlighted the importance of central bank digital currencies and bank-issued deposit tokens, omitting any reference to stablecoins as the country considers new cryptocurrency regulations. Shin, who commenced his four-year term, drew attention to the bank's ongoing Project Hangang, a retail CBDC and deposit-token pilot, as well as its participation in Project Agorá, a cross-border tokenization initiative led by the Bank for International Settlements. He positioned digital currency as a key aspect of the central bank's strategy amidst economic challenges and slower domestic growth. Notably, Shin's remarks did not mention stablecoins, a topic that has been at the forefront of policy discussions in Seoul, with lawmakers debating 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 speech outlined a bank-led model, where the central bank would issue a CBDC, while commercial banks would provide deposit tokens that can be fully converted into it. 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 crypto markets and non-bank financial institutions, expanding its monitoring of cryptocurrencies and other non-traditional assets, and seeking broader access to data to track financial risks. Furthermore, Shin pledged to modernize currency markets, introducing 24-hour foreign exchange trading and an offshore won settlement system.