Governor Lee Chang-yong of the Bank of Korea proposed a cautious approach to implementing Korean won stablecoins, emphasizing the need for regulatory compliance.
Bank-Led Initiative
In his statement at the National Assembly, Governor Lee emphasized that the issuance of stablecoins should start with banks. He highlighted the importance of incorporating programmable functions into currency while weighing associated risks. "Only large enterprises with KYC systems should be allowed to issue stablecoins," he stated.
Diverse Legislative Responses
Responses in the National Assembly were varied, with lawmakers proposing different bills for the regulation of KRW-pegged stablecoins. Concerns center on potential disruptions to the financial system if non-bank companies enter the stablecoin market, emphasizing the need for a measured legislative approach.
Historical Precedents and Their Significance
History shows that when non-bank entities were allowed to issue stablecoins, it caused shifts in retail deposits, challenging traditional banking systems. Thus, a cautious approach to stablecoin issuance may set an important norm for regulation, balancing innovation with systemic safeguards.
Overall, Governor Lee Chang-yong's initiative assures the necessity for a reasoned and controlled approach to stablecoin issuance, which may help mitigate systemic risks and ensure the stability of financial instruments.
