Bank of Korea's Stance on Won Stablecoins

Bank of Korea Governor Rhee Chang-yong has once again highlighted the urgent need for regulating the issuance of private sector-led won stablecoins. Speaking at the European Central Bank (ECB) Forum in Sintra, Portugal, Rhee warned that the unchecked proliferation of these digital currencies could lead to significant capital outflow, undermining the country's financial stability.

The Risks of Unregulated Stablecoins

Rhee expressed concerns that allowing the issuance of unregulated won stablecoins might accelerate their conversion to dollar stablecoins, complicating capital flow management. He pointed out the challenges in controlling money supply if private funds flood the market due to won stablecoin issuance.

Industry Demands vs. Regulatory Challenges

Despite the fintech industry's push for the issuance of won stablecoins to maintain monetary sovereignty, Rhee argued that such moves could ironically increase the use of dollar stablecoins. However, acknowledging the evolving demands, he suggested the need for regulatory adjustments to address these new challenges.

Monetary Policy and Financial Stability

Rhee also touched on the broader implications for monetary policy, noting the rapid growth of household debt in the metropolitan area as a pressing concern. He emphasized the importance of monitoring these trends closely when considering future interest rate adjustments.