South Korea's new central bank governor advocates for CBDC but makes no mention of stablecoins

Recently, South Korea's newly appointed central bank governor, Lee Ju-yeol, in his first policy speech since taking office, emphasized #Central Bank Digital Currency (CBDC) and bank-issued deposit tokens, but did not mention stablecoins.

Although South Korea has been working to establish a regulatory framework for stablecoins and develop the local market, the governor's remarks may indicate that stablecoins will play a secondary role during his term.

In his inaugural speech, Lee Ju-yeol outlined priorities for the next four years. He reaffirmed that the central bank's mission is to maintain monetary trust and the stability of payment and settlement systems, while preparing for digital financial innovation.

He stated that the internationalization of the Korean won is "an important task to establish a monetary infrastructure that matches our country's economic status," and that CBDC and deposit tokens are key elements to enhance the value of the Korean won.

Furthermore, through international collaborations such as the "Han River Project Phase 2" and the Agora project, the scope of applicability for Korea's CBDC and deposit tokens will be expanded, significantly strengthening the Korean won's position in the digital payment environment.

However, he also emphasized that the internationalization of the won and monetary system reforms should not undermine financial stability, so the central bank must implement appropriate safeguards and macroprudential frameworks.

Notably, Lee Ju-yeol made no mention of stablecoins in his speech, although he previously stated that stablecoins denominated in Korean won could coexist advantageously with CBDC and deposit tokens in the future. This shift also reflects a change in his attitude toward stablecoins.

Meanwhile, legislation on stablecoins in South Korea is currently at a standstill. Last year, due to disagreements between the Financial Supervisory Service and the central bank, lawmakers delayed the implementation of the second phase of the "Virtual Asset User Protection Act," which aims to address the issuance and distribution of dollar-pegged stablecoins.

Although all parties agree that banks should be involved, disagreements remain over the shareholding requirements for issuers. The central bank advocates that banking consortia hold at least 51% of shares, while the Financial Services Commission (FSC) worries this could suppress the enthusiasm and innovation of tech companies.

In summary, as South Korea urgently needs institutional development, governance issues such as restrictions on major shareholders' stake ratios have already become dominant in the market. Such policy deviations could cause South Korea to lose its edge in the global digital asset competition.