BOK Governor Backs CBDCs, Tokenized Deposits Amid Risks

Shin Hyun-song backed central bank digital currencies and tokenized deposits in his inaugural address in Seoul after taking office. He linked the measures to goals of price stability and financial stability.

He pledged to advance the Bank of Korea’s Project Hangang into its second phase, a pilot testing a blockchain-based wholesale CBDC system led by the central bank.

Shin highlighted cross-border tokenization and the bank’s participation in the Agora Project, launched in April 2024 by the Bank for International Settlements and seven central banks to study tokenized cross-border payments. He said these initiatives ‘will elevate the status of the Korean won in the digital payment environment.’

The governor did not address won-pegged stablecoins in the speech. Lawmakers and regulators remain divided over whether issuance should be limited to commercial banks or opened to fintech and technology companies, and draft legislation on stablecoins is still stalled.

Shin has written that stablecoins face challenges as money because blockchain networks are fragmented across different chains with varying fees, security and degrees of decentralization.

He warned that rising tensions in the Middle East and higher oil prices have increased uncertainty for the global economy and called for prudent, flexible monetary policy to manage inflation pressures and other shocks that could affect the bank’s decisions.

Separately, the Ministry of Economy and Finance is preparing a regulatory sandbox to test tokenized deposits for selected government operational spending. The pilot will start in Sejong City with limits on timing and spending categories, and the ministry targets a full rollout in the fourth quarter of 2026.

Shin’s prior roles include serving as economic adviser at the BIS from May 2014 to March 2026 and leading the BIS Monetary and Economic Department beginning in January 2025. The Bank of Korea will proceed with technical and regulatory work for wholesale CBDC trials and coordinate with domestic regulators on tokenized deposits while debate continues over retail stablecoin rules.