South Korea’s central bank has expressed caution over the potential consequences of issuing won-pegged crypto stablecoins, raising concerns that their adoption could inadvertently boost demand for US dollar-backed stablecoins.
“Issuing won stablecoins may not reduce the use of dollar stablecoins, but rather facilitate the exchange between dollar stablecoins and won stablecoins,” he stated.
According to Lee, this shift could ultimately increase demand for dollar stablecoins, a dynamic that could work against President Lee Jae Myung’s broader agenda of strengthening the role of the Korean won in digital finance.
Governor Lee clarified that the central bank is not fundamentally opposed to crypto stablecoins backed by the Korean won but emphasized that a regulatory framework must be in place to manage their impact on financial stability.
Lee called for a broader discussion on how such a transition might affect bank profitability and the overall structure of the financial industry. “We need to paint the bigger picture on how the banking industry, such as its profitability, [would be affected] in case payment and settlement services move to stablecoins,” he said.
The South Korean Ministry of Economy and Finance and the Financial Services Commission are expected to collaborate with the BOK on shaping future stablecoin policy.
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