Shin Hyun-song, the Bank of Korea governor nominee who has expressed a negative view on introducing a won-denominated stablecoin, said on the 15th that he will take an open-minded view going forward. He stepped back from his past caution and signaled policy flexibility.
At his confirmation hearing held at the National Assembly's Planning and Finance Committee that day, Shin said, "It is true that I was negative about stablecoins and virtual assets in the past," but noted, "In a position leading the Central Bank, we must gather the views of various stakeholders and consider ways to develop the ecosystem in a mutually complementary manner," and stated accordingly.
Shin said, "I believe there is a role for stablecoins and deposit tokens based on Central Bank Digital Currency (CBDC)," adding, "It is right to optimize their uses and align them with their respective purposes."
On the argument that banks should hold the initiative in issuing stablecoins, he assessed, "This proposal is based on the premise that banks are best at customer due diligence." He added, "There is criticism that this hinders innovation, but if Fintech corporations play a role within a consortium, they can fully demonstrate their capabilities."
A stablecoin is a virtual asset whose value is linked to legal tender such as the dollar or to real assets like gold or bonds. It is considered to have lower price volatility than general cryptocurrencies without underlying assets, but it has the limitation that its stability depends on the issuer's credit.
The Bank of Korea (BOK) has presented CBDC, a digital currency it issues itself, and deposit tokens issued by each bank based on it as alternatives. Furthermore, it has argued that even if the private sector issues a won-denominated stablecoin, it should be structured so that nonbank entities such as Fintech corporations participate in a bank-centered consortium.
Shin has also maintained a similar stance in the past. In the annual report of the Bank for International Settlements (BIS) published in Jun. last year, he warned, "Stablecoins not only fail to meet the requirements of a stable currency, but, lacking appropriate regulation, can pose significant risks to financial stability and monetary sovereignty."