South Korea's new central bank governor takes office! Promises to expand CBDC and deposit tokens, but does not mention Korean won stablecoins

Former BIS senior executive Shin Hyun-song takes office as South Korea’s central bank governor, declaring that he will use flexible policies to address inflation pressures brought about by conflicts in the Middle East. He will push forward the second phase of the “Hangang Project,” expanding the application of CBDC and deposit tokens.

Shin Hyun-song, a senior executive at the Bank for International Settlements (BIS), officially assumes the position of Governor of the Bank of Korea (BOK). In his inaugural speech, Shin Hyun-song said he will respond to inflation pressures caused by Middle East geopolitical tensions through flexible monetary policy, and promote blockchain-based financial innovation for central bank digital currencies (CBDC) and deposit tokens.

South Korea’s central bank expands CBDC and deposit token applications

Protecting the stability of the payment and settlement system and driving a digital financial transformation are key priorities during Shin Hyun-song’s tenure. He pledged to work with the government to promote 24-hour foreign exchange market trading, and to build an offshore Korean won settlement system to enhance the Korean won’s international standing. To address the future digital currency ecosystem, the Bank of Korea will, through the second phase of the “Hangang Project,” expand the application of central bank digital currencies (CBDC) and deposit tokens, and actively participate in international cooperation initiatives such as “Project Agora,” strengthening the competitiveness of the Korean won in global payment networks.

Expand monitoring of non-bank system risks; no mention of Korean won stablecoins

Although Shin Hyun-song did not mention the Korean won stablecoin pegged to the Korean won in his speech—despite stablecoins playing an indispensable role in South Korea’s recent wave of digital transformation—the newly appointed governor’s first policy statement left not a single word about stablecoins.

Meanwhile, in response to the increasingly blurred boundary between South Korea’s banking and non-banking sectors, Shin Hyun-song pointed out that traditional regulatory frameworks are no longer sufficient to deal with complex systemic risks. The Bank of Korea will combine market price indicators to strengthen its early warning capabilities, expand the scope of information collection, and bring off-balance-sheet transactions and non-traditional financial products from non-bank institutions into its analysis, actively preventing potential financial storms.

The central bank of South Korea will actively intervene in national structural reforms

Faced with deep-rooted economic issues in South Korea such as changing demographics, widening income polarization, and real estate and household debt, Shin Hyun-song believes that structural factors are key variables affecting monetary policy transmission. He announced that in the future the Bank of Korea will no longer be constrained by traditional functions, and will provide specific policy recommendations through in-depth economic research to help guide the country’s economic structural transformation in a positive direction.

• This article is reprinted with permission from: 《Chain News》
• Original title: 《South Korea’s central bank governor’s inaugural speech: expanding CBDC and deposit tokens, with no mention of the Korean won stablecoin》
• Original author: Co2