Speaking at a digital currency conference in Seoul, Rhee Chang-yong expressed concerns about the widespread adoption of stablecoins like USDT and USDC, which could present new challenges to central bank operations. The increasing popularity of stablecoins could undermine the effectiveness of monetary policy not only in South Korea but also in other countries, leading to financial instability, Chan Yong warned. These concerns were fueled by the notable collapse of TerraUSD and the Luna coin that shook the cryptocurrency industry last year.
“Despite being labeled as ‘stable cryptocurrencies,’ they often lack stability. As a result, central banks need to urgently consider the implementation of CBDCs, whether in retail or wholesale form,” stated the Governor of the Central Bank of Korea.
Previously, in collaboration with the Bank for International Settlements (BIS), the Bank of Korea initiated a project to develop a wholesale CBDC. Recently, the Bank of Korea announced a pilot project to test its own digital currency using public digital vouchers. Furthermore, the regulator has selected three cities where the digital Korean won will be trialed for retail payments.
In terms of cryptocurrency regulation within the country, the South Korean Financial Services Commission (FSC) revealed plans last year to establish a regulatory framework drawing insights from the United States and the European Union.