Bank of Korea Governor Shin Hyun-song used his first major policy speech to draw a firm line on the future of digital money in South Korea: the country will prioritize a central bank digital currency (CBDC) and bank-issued deposit tokens, rather than building its monetary future around private stablecoins. The message stood out not only because it came at the start of Shin’s tenure, but also because South Korea is actively refining its digital asset regulatory framework as debate over stablecoins continues.
Shin took office on April 21, 2026, beginning a four-year term after succeeding Rhee Chang-yong. In his inaugural policy address, he did not mention won-based stablecoins at all. That omission immediately caught the attention of market observers, especially given that the country is simultaneously moving toward finalizing the Digital Asset Basic Act. In practical terms, the speech suggested that the Bank of Korea wants digital won infrastructure to remain anchored in regulated public-sector design, with private issuance kept away from the top layer of the system.
A Two-Tier Digital Money Model
The framework outlined by Shin centers on a two-layer structure. Under this model, the central bank would issue a wholesale or hybrid CBDC, while commercial banks would issue deposit tokens that are fully convertible and designed for everyday payments and settlement. This architecture preserves the Bank of Korea’s control over the monetary base while giving banks a direct operational role in distributing tokenized money to users and businesses.
The significance of this design lies in what it excludes. By putting the central bank and regulated banks at the core of digital won issuance, the model leaves little room for privately issued alternatives to become the dominant settlement asset. Rather than endorsing an open race among CBDCs, deposit tokens, and stablecoins, Shin’s speech placed official and bank-linked instruments at the center of South Korea’s future payment stack.
Project Hangang Moves From Technical Testing to Real-World Use
One of the clearest signals in the speech was Shin’s emphasis on Phase 2 of Project Hangang, the Bank of Korea’s flagship digital won pilot. According to the material cited, the second phase began in March 2026 and has expanded to include nine major commercial banks. Unlike the first stage, which focused largely on technical trials involving a blockchain-based digital won, the second stage is aimed at practical deployment and real transaction testing.
The range of potential use cases is also becoming more concrete. Among the most notable applications under review is the delivery of government subsidies worth up to 110 trillion won, or about $73 billion. That scale suggests the Bank of Korea is no longer treating the project as a purely experimental technology exercise. Instead, it is testing whether a CBDC and deposit-token framework can operate in high-volume public-sector and retail-style payment environments.
Phase 2 is expected to examine a broader set of functions, including programmable money, compliance tools, and integration with the country’s existing payments infrastructure. In other words, the pilot is moving beyond blockchain feasibility and into the much harder territory of usability, institutional coordination, and regulatory fit.
Why the Stablecoin Silence Matters
The omission of stablecoins from Shin’s first policy address was notable because it contrasted with his earlier tone during the confirmation process. In written responses to lawmakers in mid-April, he had taken a more open approach, saying CBDCs and deposit tokens could coexist with stablecoins in both complementary and competitive ways. He also indicated that any stablecoin issuance should begin with regulated banks.
That earlier formulation implied a broader digital asset ecosystem in which several forms of tokenized money might compete or evolve side by side. But in his first formal speech as governor, Shin chose not to repeat that framing. Observers tracking the transition have interpreted the shift as deliberate. Whether that means the Bank of Korea is moving toward a stricter hierarchy of digital money or simply tightening its messaging, the change in tone suggests the institution wants to avoid any ambiguity over what it considers systemically preferable.
For policymakers, the distinction matters. Stablecoins can offer speed and market-driven innovation, but they also raise concerns around reserve backing, monetary sovereignty, financial stability, and fragmentation of payment systems. By foregrounding CBDCs and deposit tokens instead, the Bank of Korea appears to be signaling that innovation is welcome only where oversight remains strong and convertibility is clear.
Commercial Banks Keep a Central Role
Another important takeaway from Shin’s framework is that commercial banks are not being sidelined by the digital won strategy. On the contrary, deposit tokens give banks a meaningful role in the next generation of payments. They would remain the primary interface for consumers and firms, distribute digital money under regulation, and potentially gain a foothold in programmable finance without losing the familiar banking structure that underpins the broader financial system.
This matters for institutional adoption. A model that keeps banks at the center may reduce resistance from the financial sector, improve integration with current payment rails, and support a smoother transition from legacy systems to tokenized settlement. It also aligns with the Bank of Korea’s effort to preserve monetary control while still modernizing infrastructure.
Cross-Border Ambitions Through BIS Project Agora
Shin also pointed to the Bank of Korea’s participation in Project Agora, a cross-border tokenization initiative led by the Bank for International Settlements (BIS). The project explores how multi-CBDC platforms could improve the speed and efficiency of international payments and settlement. For South Korea, that effort is tied to a broader objective: expanding the role of the Korean won in global digital payment networks without undermining capital controls or destabilizing the domestic financial system.
The Bank of Korea’s involvement in a BIS-led initiative is consistent with Shin’s background. He served at the BIS from 2014 to early 2026, first as an economic adviser and later as head of the monetary and economic department. Before that, he held academic roles, including at Princeton University. His tenure at the BIS overlapped with several collaborative CBDC experiments, including projects involving South Korea. That experience appears to be shaping his preference for interoperable, regulated, and internationally informed digital money architecture.
Broader Policy Agenda: FX, Oversight, and Risk Monitoring
CBDC policy was not the only issue Shin raised. His opening priorities also included 24-hour foreign exchange trading, the development of an offshore won settlement system, and tighter oversight of both crypto markets and non-bank financial institutions. He said the Bank of Korea would pursue a “prudent and flexible” monetary policy stance during his term.
On the supervision front, Shin signaled that crypto markets and non-bank financial activity will face closer scrutiny under his leadership. He said the central bank would improve access to data for risk monitoring and strengthen its ability to track activities outside the traditional banking system. That suggests South Korea’s digital money strategy is not only about building new payment tools, but also about reinforcing visibility and control across a financial landscape that is becoming more complex and more tokenized.
A Shift From Experimentation to Controlled Commercialization
South Korea’s CBDC development has continued across multiple central bank leadership terms. Under the previous administration at the Bank of Korea, technical pilots advanced and public-sector use cases such as subsidy distribution were explored. Under Shin, the emphasis appears to be shifting toward commercialization under regulation. The policy direction favors infrastructure that is interoperable, supervised, and anchored by public institutions over broader private-sector experimentation.
That does not necessarily mean stablecoins will be excluded from South Korea’s digital asset ecosystem forever. But based on Shin’s first speech, they are clearly not at the center of the central bank’s preferred architecture. For now, the message is straightforward: if South Korea is going to digitize the won at scale, the Bank of Korea wants that process led by the central bank and regulated commercial banks, not by private issuers setting the terms from the outside.
As legislative work on digital asset rules continues, Shin’s opening remarks provide an important early guide to how one of Asia’s most closely watched financial authorities sees the next phase of money. The technology may be new, but the policy instinct is familiar: innovate, but keep the core of the monetary system under firm institutional control.