1. The Statement That Will Shape South Korea's Digital Money Policy
Before a newly nominated central bank governor takes office, the written remarks submitted to parliament for a confirmation hearing are among the most policy-consequential documents in that country's financial regulatory calendar. They define the incoming governor's priorities, signal the regulatory direction on contested questions, and — in the case of digital currency — establish the hierarchy of state-backed versus private digital money that will shape commercial decisions across the banking sector for years.
Shin Hyun-song's written remarks, submitted to the National Assembly Finance and Economy Committee ahead of his April 15 confirmation hearing, establish a clear hierarchy for South Korea's digital money future: CBDC issued by the Bank of Korea at the top, bank-issued deposit tokens built on that CBDC infrastructure in the middle, and privately issued stablecoins in a supplementary and competitive role at the bottom. "I expect that central bank digital currencies and deposit tokens will be able to coexist with stablecoins in a manner that is supplementary and competitive to each other," Shin said, according to Yonhap.
The formulation is carefully calibrated — "supplementary and competitive" acknowledges that stablecoins will exist and may compete with the state-led digital money stack, but positions them as additions to rather than replacements for the central bank-anchored architecture. It is a view that has significant implications for South Korea's fintech ecosystem, its nascent won stablecoin market, and the broader global conversation about where privately issued stablecoins fit in the emerging digital currency landscape.
2. Who Is Shin Hyun-song
Shin Hyun-song is not a generalist central banker — he is one of the world's most prominent academic monetary economists, with a specific research focus on financial intermediation, monetary economics, and international capital flows. He served as Economic Adviser and Head of Research at the Bank for International Settlements, the central bank for central banks, from 2014 to 2024 — a decade in which he helped shape the global regulatory community's thinking about digital money, stablecoins, and CBDCs through BIS research papers and annual reports.
His BIS tenure gives him a specific perspective on stablecoins that is grounded in institutional analysis rather than ideological opposition. In 2022, he memorably asked: "If we have the real thing — central bank money — why do we need stablecoins?" That rhetorical question captured the central bank community's prevailing view that stablecoins represent a private sector workaround for the absence of publicly accessible digital central bank money, rather than a necessary innovation in their own right. His April 2026 remarks are a moderated version of that skepticism — accepting stablecoins as useful in specific application contexts while insisting that the monetary system's foundation must remain under public authority.
3. Project Hangang and the CBDC Architecture
Shin's proposed framework builds directly on the Bank of Korea's existing Project Hangang — a pilot program that has been testing how bank-issued deposit tokens can be built on top of a wholesale CBDC infrastructure provided by the central bank. The architecture is conceptually straightforward: the Bank of Korea issues wholesale CBDC that functions as settlement-layer money accessible only to regulated financial institutions, and commercial banks issue their own deposit tokens — digital representations of bank deposits — built on that wholesale CBDC foundation.
This two-tier digital money architecture mirrors how the traditional monetary system is organized: central bank money as the settlement layer, commercial bank deposits as the primary means of retail payment, and the central bank providing the reserve infrastructure that guarantees ultimate convertibility. Translating that architecture into digital form through wholesale CBDC and deposit tokens preserves the existing division of responsibility between the central bank and commercial banks while upgrading the technical infrastructure.
Shin committed in his written remarks to continue Project Hangang and upgrade the payment and settlement infrastructure to support private-sector innovation — signals that the Bank of Korea under his leadership will continue the wholesale CBDC development path while leaving retail consumer-facing innovation to the commercial banking sector.
4. The Bank-Led Issuance Model
Shin's proposed approach to stablecoin issuance follows directly from his institutional analysis of where compliance and accountability capabilities currently reside. He proposed a bank-led consortium model for won stablecoin issuance — an approach in which licensed commercial banks, acting individually or collectively, would be the issuers of any regulated won-denominated stablecoin.
The rationale for starting with banks is practical rather than ideological: commercial banks in South Korea already operate under comprehensive anti-money laundering and know-your-customer compliance frameworks, are subject to regular regulatory examination, and have established relationships with the Bank of Korea and Financial Services Commission that provide a supervisory infrastructure for monitoring stablecoin issuance activity. A stablecoin issued by a bank that already meets these standards starts from a compliance baseline that a non-bank issuer would need years to build.
Shin did not propose permanently excluding non-banks from stablecoin issuance — he suggested that participation by non-banks could be expanded gradually over time, as the regulatory framework develops and as non-bank issuers demonstrate the compliance capabilities that bank issuers already possess. This sequenced approach — banks first, broader participation later — is consistent with how South Korea has historically approached financial market liberalization: incremental expansion of permitted activities as supervisory confidence develops.
5. KRW1: South Korea's First Regulated Stablecoin
South Korea's first fully regulated won stablecoin, KRW1, debuted in February 2026 through a partnership between crypto custody service provider BDACS and Woori Bank — one of South Korea's four major commercial banks. The KRW1 launch preceded Shin's appointment and represents the first practical implementation of the bank-led stablecoin issuance model he now advocates.
KRW1 is backed by won reserves held in a Woori Bank trust account, redeemable at par on demand, and subject to the same AML/KYC requirements applicable to Woori Bank's other financial products. The bank's involvement provides the compliance infrastructure and institutional credibility that Shin argues should be the foundation of any regulated stablecoin program. The existence of KRW1 as a functioning product also provides a concrete reference point for policymakers evaluating whether the bank-led model can produce commercially viable stablecoins — the February launch suggests it can, at least at the initial stage.
6. The Limited Role for Stablecoins: Tokenized Assets and Programmable Payments
Shin's framework does not reject stablecoins entirely — it assigns them specific use cases where their technical characteristics provide genuine value that CBDCs and deposit tokens do not easily replicate. He identified two primary positive functions: serving as a transaction medium for tokenized assets, and enabling programmable payment functions through smart contract integration.
For tokenized asset transactions — real estate, securities, commodities, and other real-world assets represented as blockchain tokens — a native digital payment rail that can settle transactions atomically with the transfer of the underlying asset provides efficiency advantages over settlement through traditional banking infrastructure. A won stablecoin that can be embedded in a smart contract to automatically execute payment upon asset delivery, without requiring manual banking system intervention, represents a genuine functional improvement over current settlement processes.
The programmable payment dimension is similarly specific: stablecoins with smart contract capabilities can support conditional payments, automated recurring transactions, escrow arrangements, and complex multi-party financial logic that static digital money cannot easily implement. These applications represent genuine innovation in payment functionality that has commercial value independently of any monetary system hierarchy debate.
7. Skepticism on Crypto as Money
Beyond the stablecoin framework, Shin expressed broader skepticism about cryptocurrencies' ability to serve as money in the full economic sense. He argued that digital assets fall short of money's core functions — unit of account, medium of exchange, and store of value — in ways that represent structural limitations rather than immature adoption challenges.
The unit of account limitation is the most fundamental: when goods and services are priced in won rather than in any cryptocurrency, the cryptocurrency is not functioning as money in the primary economic sense of providing the denominating unit for economic calculation. The medium of exchange limitation reflects the low acceptance of cryptocurrencies for routine transactions relative to fiat currencies. The store of value limitation reflects the volatility of most cryptocurrency prices relative to the stability that effective stores of value require.
Shin's framing implies that these limitations are not problems that more adoption or better technology will solve — they are inherent to the nature of assets whose value is determined by speculative demand rather than backed by the monetary authority and legal tender status of a central bank. For a central banker approaching digital currency policy from a monetary economics perspective, this analysis positions CBDCs as the appropriate foundation for digital money and stablecoins as at best useful utilities rather than monetary instruments.
8. The Foreign Exchange Efficiency Question
One of the most commercially contested claims in the crypto industry is that blockchain-based payment systems, including stablecoins, will dramatically improve the efficiency of cross-border payments and foreign exchange transactions by eliminating correspondent bank chains, reducing settlement times, and lowering fees. Shin challenged this claim directly.
He argued that it remains unclear whether blockchain-based foreign exchange systems can fully comply with existing capital control regulations and AML requirements, and questioned whether any efficiency gains would outweigh the regulatory compliance costs that blockchain-based systems would need to add to meet those requirements. His specific concern about capital control compliance is particularly relevant for South Korea, which maintains foreign exchange regulations that govern the movement of capital across its borders and which any new payment infrastructure must accommodate.
This is a more nuanced skepticism than simply dismissing blockchain's efficiency claims. It acknowledges that efficiency gains may exist in specific use cases while questioning whether the compliance cost of meeting regulatory requirements — which traditional banking infrastructure has already absorbed and amortized over decades — would leave net efficiency benefits after the regulatory overhead is deducted.
9. The Regulatory Tension Within South Korea
Shin's CBDC-first framework represents the Bank of Korea's institutional position in an ongoing internal debate about digital currency regulation in South Korea. The Financial Services Commission — the primary financial market regulator — has been more open to faster and broader stablecoin development, including potential non-bank issuance, driven by concerns that overly restrictive frameworks will slow innovation and allow competing jurisdictions to establish first-mover advantages in digital finance.
This tension between the central bank's monetary stability mandate and the FSC's market development mandate is a structural feature of South Korea's financial regulatory architecture that Shin will need to navigate as governor. His written remarks represent the Bank of Korea's position clearly — CBDC-led, bank-issued, compliance-first — but they also acknowledge that stablecoins will coexist with state-backed digital money, suggesting an intent to engage with the FSC's framework rather than simply override it.
Some South Korean lawmakers have already introduced proposals that would permit non-bank entities to issue stablecoins — a position that goes further than either the Bank of Korea or FSC have publicly endorsed. The legislative debate will create a third party to the central bank-FSC tension and may produce a stablecoin framework that is more permissive than Shin's written remarks suggest he would prefer.
10. South Korea in the Global Digital Currency Context
South Korea's digital currency policy debate occurs in a global context in which the diversity of national approaches to CBDCs and stablecoins is becoming more apparent. The United States, through the GENIUS Act, has prioritized bank-issued stablecoins under federal reserve requirements, leaving the CBDC question largely unresolved. The European Union's MiCA framework permits a range of stablecoin issuers under a licensing regime, without an explicit CBDC-first hierarchy. Hong Kong, as documented in its first stablecoin licenses, is licensing its note-issuing banks as the initial stablecoin issuers, producing a bank-led model similar to what Shin proposes for South Korea. Japan, as covered in the FIEA amendment, is reclassifying crypto as financial instruments under securities law rather than specifically focusing on stablecoin architecture.
South Korea's approach — if Shin's framework is adopted — would represent one of the more explicitly state-anchored positions, with a CBDC infrastructure layer explicitly designated as the foundation on which any private digital money innovation is built. That approach reflects both Shin's intellectual background in monetary economics and the Bank of Korea's institutional perspective on the hierarchy of monetary authority. Whether the commercial ecosystem — including the technology companies, fintech startups, and crypto-native firms that have driven South Korea's high crypto adoption — will find sufficient commercial opportunity within that framework, or whether market pressure will push the regulatory boundary toward more permissive stablecoin issuance, will be one of the defining questions of Shin's tenure.