Recently, Bank of Korea Deputy Governor Ryoo Sangdai expressed the desire for banks to become the primary issuers of stablecoins in Korea, thereby stabilizing the financial system.
Bank of Korea's Position on Stablecoins
At a press conference, Ryoo noted that a won-denominated stablecoin should first be introduced at regulated commercial banks to provide additional consumer protection. "It would be desirable to initially allow stablecoin issuance primarily through banks, which are subject to higher levels of financial regulation, and gradually expand it to the non-banking sector," he said.
Regulatory Concerns and Cautions
The Bank of Korea also expressed concerns over the potential negative impact of stablecoins. Ryoo warned that a rollout of stablecoins could accelerate capital outflows and disrupt the current stance on foreign exchange liberalization and the internationalization of the Korean won. He added, "We also need to consider the implications for financial sector restructuring, including the potential introduction of narrow banking."
Global Initiatives for Stablecoins
South Korea is not the only country considering stablecoin options. Recently, Visa announced a partnership with Yellow Card Financial to accelerate the adoption of stablecoins in Africa. Additionally, a plan for the Russian government to develop its own stablecoin has been discussed, and several major institutions in Abu Dhabi teamed up to create a new dirham-pegged stablecoin.
The proposals from the Bank of Korea's deputy governor underscore the need for a safe and regulated approach to the implementation of stablecoins, despite the growing global initiatives in this area.
