The Bank of Korea (BOK), the central bank of South Korea, is calling for a slow and controlled introduction of stablecoins in the country.
Deputy Governor Ryoo Sang-dae believes that commercial banks should be the first to issue these digital tokens, before allowing other institutions to take part.
Speaking at a press conference on June 24, Ryoo said, “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”.
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He explained that the goal is to create a layer of protection in case stablecoins cause problems in the market or negatively affect consumers.
Ryoo also noted that stablecoins, if widely adopted, could impact the country’s currency policies. He warned that they could lead to faster movement of money overseas and might push South Korea to rethink its current approach to foreign exchange and the role of the won in global markets.
He added that a rollout of these tokens could raise questions about changes to the financial system, including the idea of “narrow banking”, where banks are limited to holding only safe assets.
Additionally, Ryoo said the central bank will continue its work on a digital version of the won. He described the central bank digital currency (CBDC) as a possible tool to manage the risks that come with private stablecoins.
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