South Korea’s central bank will expand central bank digital currency (CBDC) trials under new leadership. The move signals a policy shift toward state-backed digital money as lawmakers delay stablecoin legislation.
Shin Hyun-song began his four-year term as governor of the Bank of Korea on Tuesday in Seoul. He pledged to stabilize prices amid Middle East supply shocks while strengthening payment systems and advancing blockchain-based finance initiatives.
Will CBDCs Outpace Stablecoins In Korea?
Shin confirmed the bank will scale CBDC and deposit token testing through the second phase of Project Hangang. Yet, he made no reference to Korean won-pegged stablecoins, despite their growing role in domestic digital payments. Data from industry participants shows local firms have expanded stablecoin infrastructure ahead of pending regulation.
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The omission stands out as legislators continue work on the Digital Asset Basic Act, which includes a framework for stablecoins. Discussions on the bill remain delayed until after the June 3 regional elections, creating regulatory uncertainty across the sector.
During his tenure at the Bank for International Settlements, Shin argued stablecoins cannot replace sovereign currencies due to fragmentation risks. Still, he later indicated that won-based stablecoins could coexist with CBDCs within a regulated system, reflecting a more flexible stance.
The Bank of Korea had paused aspects of its CBDC program last June as stablecoin adoption accelerated domestically. Now, the central bank appears to be reasserting control over digital currency development while coordinating with global initiatives such as Project Agora.
Future progress will hinge on legislative clarity and the outcome of ongoing CBDC trials, with market participants watching whether Korea formalizes a dual-track system for state and private digital money.
