Bank of Korea Advocates for Early Involvement in Stablecoin Authorization

The Bank of Korea (BOK) has recently emphasized the necessity for monetary authorities to be involved from the initial stages of authorizing stablecoins pegged to the Korean won. This move aims to prevent potential complications in monetary policy operations.

High-ranking officials have pointed out that if won-based stablecoins circulate similarly to legal tender, they could disrupt the effectiveness of monetary policies. Drawing parallels with the U.S., where the Federal Reserve plays a role in similar legislations, the BOK is pushing for a structured approach to digital currencies.

Impact on Monetary Policy and Financial Stability

Koh Kyung-chul of the BOK highlighted the profound impact stablecoins could have on central bank policies, including monetary policy, financial stability, and payment systems. The widespread use of won-pegged stablecoins might substitute the demand for the won itself, affecting money supply and interest rates.

Currently, the issuance of won-based stablecoins is not permitted in Korea. However, the discussion around their potential introduction has become a pivotal issue, especially with the upcoming presidential election.

Looking Towards a Digital Future

The BOK is not only focusing on the immediate regulatory needs but also on building a sustainable digital payment ecosystem. This includes the development of a central bank digital currency (CBDC) and considering how stablecoins and deposit tokens can coexist within this framework.

With the global use of dollar-based stablecoins like USDT in remittances and payments, the BOK's call for urgent regulation reflects a broader concern over monetary sovereignty and the effectiveness of monetary policy.