The Governor of the Bank of Korea discussed support for the development of a won-denominated stablecoin under the control of banks. He highlighted the risks and potential benefits of such an initiative.
Governor of Bank of Korea on Stablecoin Issuance
Bank of Korea Governor Lee Chang-yong expressed cautious support for the development of won-denominated stablecoins but emphasized that their issuance should be led by the banking sector. He noted the necessity of such stablecoins for future program functions of the currency while stressing that implementation should be gradual and mindful of risks.
Risks and Economics of Stablecoins
Lee also highlighted the risks associated with money laundering and disruption to the banking financial system if stablecoins are issued by non-bank companies. He stated, "To prevent money laundering issues, only large companies with KYC systems should be allowed to issue stablecoins." The governor added that there are concerns regarding wealthy individuals moving won deposits abroad, especially if unregulated stablecoins are introduced.
Ensuring Financial System Stability
Lee Chang-yong also examined the implications of such coins for the economy, noting that if non-bank institutions were to issue stablecoins, traditional liquidity management tools might become ineffective. "If there is a shift of deposits, this could exacerbate liquidity problems," he added. The governor believes that regulating the stablecoin licensing process is essential to ensure financial system stability.
Regulation and oversight of stablecoin issuance remain critical issues for Korean authorities, considering the potential risks to financial systems and economic stability.
