South Korea Debates a Digital Won to Counter USD Stablecoins

• The Governor of the Bank of Korea, Rhee Chang-yong, emphasized that any move toward a central bank digital currency or stablecoin must be grounded in financial stability and not in short-term stimulus
• It was reported that the central bank is especially interested in use cases where private stablecoins may pose systemic risks
• Last week, during President Lee Jae‑myungs early tenure, the ruling Democratic Party proposed the Digital Asset Basic Act, which would enable local companies to issue won-backed stablecoins

The Bank of Korea (BOK) is evaluating the potential launch of a Won-backed stablecoin with a cautious but forward-looking approach to digital currencies.

BOKs Governor Rhee Chang-yong emphasized that any move toward a central bank digital currency (CBDC) or stablecoin must be grounded in financial stability and not in short-term stimulus. He also warned against blanket cash assistance as an economic strategy, suggesting it could distort market signals and increase fiscal risks.

The Central Bankers Sobering Warning

Rhee said that the government should prioritize targeted assistance for the self-employed and small businesses.

He also stated that hes not against the stablecoin, saying:

In addition, it was reported that the central bank is especially interested in use cases where private stablecoins may pose systemic risks. The institution noted that the rising housing prices in the Seoul metropolitan area have contributed to a higher perceived inflation rate, even with generally favorable income conditions.

South Korea as a crypto hub

The country is a major hub for crypto trading, yet it maintains strict oversight to avoid risks such as capital outflows, financial fraud, and market volatility. A state-backed stablecoin would help the government exert more control over digital transactions while competing with private alternatives like USDT and USDC.

Last week, during President Lee Jae‑myungs early tenure, the ruling Democratic Party proposed the Digital Asset Basic Act, which would enable local companies to issue won-backed stablecoins. The goal of this proposed law is to reduce the reliance on US dollar-pegged stablecoins, considering they currently account for 57 trillion won ($42 billion) in domestic trading.

The BOK specifically is participating in cross-border CBDC pilots with regional partners, including the Bank for International Settlements (BIS).

Adding to all of this, South Koreas Ministry of Science recently increased support for blockchain-based projects, showing that there indeed is an institutional interest in digital innovation.

Naturally, there are some concerns as well. Some regulators have expressed concern over unregulated stablecoins potentially undermining sovereign monetary policy.