Bank of Korea Chief Backs CBDCs and Deposit Tokens

Image Credit: Insplash

Bank of Korea (BOK) Governor Shin Hyun-song used his first address in office to put Central Bank Digital Currencies (CBDCs) and deposit tokens near the center of South Korea’s digital money agenda. Shin began his four-year term on April 21 after taking over from Rhee Chang-yong.

South Korea is still debating how private stablecoins should be regulated and how large a role they should play. Shin did not mention stablecoins in the speech, even though he had recently said won-denominated tokens could have a role alongside CBDCs and commercial bank deposit tokens.

Project Hangang Is Moving Forward

Shin said the central bank would expand the use of CBDCs and deposit tokens through the second phase of Project Hangang, the Bank of Korea’s domestic digital currency pilot. He also pointed to Project Agora, the BIS-linked cross-border payments project, as part of the bank’s plan to strengthen the won’s role in digital settlement.

That points to a bank-led model for digital money at the Bank of Korea. Instead of leading with privately issued stablecoins, Shin’s first public message focused on central bank infrastructure, commercial bank deposit tokens and payment system stability.

Stablecoins Were Left Out of the Speech

The omission stood out because won stablecoins have become a live policy issue in Seoul. During his confirmation hearing last week, Shin said he was open to won-denominated stablecoins as part of a future monetary system, while stressing that CBDCs and deposit tokens should remain central.

His inaugural speech suggests a more cautious public starting point. The Bank of Korea appears willing to support digital finance, but through rails, it can supervise closely and connect to the existing banking system.

The Wider Agenda is Financial Stability

Shin’s first address was not only about digital payments. He also warned that Middle East tensions and higher oil prices were adding pressure on inflation and growth and said monetary policy would need to stay cautious and flexible.

He also called for stronger monitoring of non-bank finance and non-traditional financial products, reflecting concerns associated with his earlier work at the Bank for International Settlements (BIS). For crypto and payments firms, the signal is direct. South Korea’s central bank is not rejecting digital money, but it wants innovation to move through a framework built around stability, banks and central bank oversight.