Bank of Korea pivots to CBDC with new chief Shin

Shin Hyun-song, the newly appointed Governor of the Bank of Korea, has announced his commitment to fostering blockchain-based financial innovation in his inaugural address. Previously head of the Monetary and Economic Department at the Bank for International Settlements (BIS), Shin officially started his four-year term on April 23 at the central bank’s headquarters in Seoul.

Focus on digital currency and payment innovation

In his speech, Shin emphasized that the central bank will remain focused on maintaining price stability and will take measures to address recent supply shocks arising from the Middle East. He also highlighted plans for the Bank of Korea to play an active role in the country’s structural reform process.

The new governor pledged to prioritize the security of payments and settlement infrastructures amid the digitalizing financial ecosystem. He underlined the bank’s intention to increase the global adoption of the national currency. Notably, Shin revealed that Phase Two of Project Hangang would expand the pilot of central bank digital currency (CBDC) and introduce “deposit token” applications to prepare for new monetary systems and to widen CBDC usage.

The Bank of Korea will also seek deeper international cooperation. Through initiatives such as BIS-led Project Agora, the bank aims to bolster the Korean won’s position within global payment platforms.

Shin Hyun-song noted, “To create secure and innovative financial infrastructure, we will collaborate through both national and international initiatives, increasing the significance of digital currencies in this new era.”

Stablecoins omitted from the agenda

Notably, Shin did not address won-pegged stablecoins in his speech, despite their status as a key pillar of South Korea’s digital transformation. Backed by President Lee Jae-myung, lawmakers continue to draft legal frameworks for stablecoins within the Digital Asset Basic Act.

Leading financial institutions in the country are increasing their investments in stablecoin and digital asset-based payment systems. However, the related legislation has been deferred and is expected to be revisited following local elections on June 3, after which progress on stablecoin regulation is anticipated to accelerate.

Last year, following a rapid expansion in the stablecoin market, the Bank of Korea temporarily paused its CBDC project. With Shin’s arrival, however, the central bank is expected to shift its focus back to CBDC and payment tokens.

Changing stance on stablecoins from the new chief

During his time at the BIS, Shin co-authored a report highlighting that stablecoins could not replace existing fiat currencies, citing concerns over fragmentation among various stablecoin platforms. Nevertheless, recent reports indicate Shin has shifted his view, voicing support for the creation of won-based stablecoins and their interoperability with CBDCs.

Under Shin’s leadership, the central bank appears poised to accelerate its digital currency and asset-backed payment initiatives, in line with global trends. The institution’s latest communications stress the importance of international collaboration and regulatory harmonization for building a robust digital financial infrastructure.