The future of currency lies before bank executives. Lee Chang-yong, Governor of the Bank of Korea, will meet with major bank executives to discuss digital currency experiments and regulatory directions for the Korean won stablecoin.
After the regular board meeting of the Bank Association on the 23rd, the Governor is expected to attend a dinner and emphasize the ongoing digital currency project 'Hangang' along with the stablecoin issue.
The Bank of Korea has been experimenting with digital currency real transactions since April with Kookmin Bank, Shinhan Bank, Hana Bank, and Woori Bank. Through the first phase of 'Project Hangang', they are testing the functions and potential applications of Central Bank Digital Currency (CBDC), with plans to enter the second phase by the end of this year. At this stage, remittance functions will be added, and digital voucher issuance targets and programs will be expanded.
Another point of interest is the Korean won stablecoin. Recently, the Democratic Party has been pushing legislation to allow stablecoin issuance based on the Korean won in non-banking sectors, but the Governor maintains a cautious stance.
The Governor views stablecoins as essentially an alternative to currency and believes they should be gradually permitted through the central bank or regulatable banks. Allowing issuance by non-banking institutions could cause confusion in monetary policy and potentially be misused as a means to circumvent capital regulations.
The banking sector acknowledges the positive aspects of stablecoins, such as reducing digital payment costs and creating new business opportunities, but is concerned about side effects like deposit outflows and profitability damage. Accordingly, the atmosphere is to carefully prepare measures to respond to structural risks.
The meeting will also discuss the establishment of a bad bank being pursued to reorganize the debts of small business owners and vulnerable groups.
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