Shin Hyun-song, nominated to head the Bank of Korea, has proposed that a digital currency issued by the central bank and deposit tokens from banks should be at the forefront of South Korea’s digital financial ecosystem, with stablecoins playing only a supplementary role. ‘I foresee central bank digital currencies and deposit tokens coexisting with stablecoins in a complementary and competitive manner,’ he told Yonhap.
In his written testimony to parliament before his April 15 confirmation hearing, Shin expressed support for introducing a won-based stablecoin but emphasized that trust in the currency is paramount. According to Yonhap, he views stablecoins as instrumental for trading tokenized assets and enabling programmable payments rather than substituting state-backed currencies.
Shin’s perspective aligns with the central bank’s stance that stablecoin issuance should commence with regulated banks due to existing compliance measures like anti-money laundering protocols and customer verification. He highlighted these banks’ pre-established frameworks as a basis for this approach, questioning claims that blockchain-based coins would enhance foreign exchange efficiency due to regulatory uncertainties and additional costs.
Regarding cryptocurrencies in general, Shin noted their inability to fulfill the fundamental roles of money as a unit of account, medium of exchange, or store of value. The Bank of Korea has cautioned that privately issued tokens could threaten monetary policy and financial stability, advocating for rigorous oversight, including anti-money laundering measures and customer verification.
Shin’s comments are timely amid ongoing debates among policymakers about market openness. While regulators favor bank-driven models, some lawmakers advocate for wider frameworks permitting non-bank issuers through new legislation. Notably, South Korea’s first fully regulated stablecoin, KRW1, was launched in February via a partnership between BDACS and Woori Bank.