Bank of Korea’s Governor Advocates for Digital Currency Innovations

In his inaugural public address, the newly appointed Governor of the Bank of Korea, Shin Hyun-song, expressed his strong endorsement for the advancement of central bank digital currencies (CBDCs) and deposit tokens. This address marks the beginning of his four-year term, which commenced after a ceremonial event in Seoul.

Shin outlined plans to move forward with the next phase of “Project Hangang,” a pilot initiative spearheaded by the Bank of Korea aimed at assessing a blockchain-based wholesale CBDC system. He emphasized the importance of international collaboration in this endeavor, highlighting efforts such as the “Agora Project,” which was established in April 2024 through a partnership involving the Bank for International Settlements (BIS) and several other central banks. This initiative focuses on the tokenization of cross-border payment systems, with Shin asserting that these collective efforts will enhance the prominence of the Korean won in digital transactions.

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During his address, it was noted that despite prior indications of an openness to stablecoins based on the Korean won, Shin did not mention this during his inaugural comments. The legislative landscape surrounding stablecoins in South Korea remains contentious, as lawmakers are divided over whether their issuance should be confined to commercial banks or should also accommodate fintech and technology firms.

In addition to discussing digital currencies, Shin raised concerns over geopolitical uncertainties, particularly referencing the instability in the Middle East and its implications for global oil prices. He highlighted the need for the Bank of Korea to remain adaptable amid growing economic volatility, inflationary pressures, and potential geopolitical shocks. His commitment to maintaining both price and financial stability through proactive monetary policies was clear.

Prior to this role, Shin served as an economic adviser at the BIS until March 2026 and had previously led the organization’s Monetary and Economic Department. His scholarly work includes an analysis published last month where he critiqued stablecoins for lacking a fundamental characteristic of currency—”unity”—due to fragmentation across various blockchain networks with differing fees and security levels.

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Looking to the future, the South Korean Ministry of Economy and Finance plans to pilot blockchain-enabled payments for select government expenditures as part of a regulatory sandbox that explores distributed ledger technology in public finance. This initiative aims to utilize tokenized deposits for operational costs and is slated for a full implementation by the fourth quarter of 2026. The testing phase will initially take place in Sejong City, with specific constraints around timing and expenditure categories.

Shin’s advocacy for CBDCs and innovative monetary solutions signifies a pivotal moment for South Korea as it navigates the complexities of digital finance and global economic influences.