A State-Led Digital Money Strategy Takes Shape
In his first major policy speech after taking office, Bank of Korea Governor Shin Hyun-song made one point unmistakably clear: South Korea’s digital money future will be built around a central bank digital currency (CBDC) and bank-issued deposit tokens, not private stablecoins. The speech, delivered after he was sworn in on April 21, offered one of the clearest signals yet that Seoul is leaning toward a regulated, state-centered digital won framework.
The omission of stablecoins was especially notable because South Korea has been actively discussing stablecoin rules as part of the broader Digital Asset Basic Act. Against that backdrop, Shin’s silence on privately issued won-based stablecoins was read by many observers as deliberate rather than accidental. His message suggested that the country’s top monetary authority wants digital money innovation to remain anchored in official institutions and supervised banking channels.
The Two-Tier Model: CBDC at the Core, Banks in Distribution
Shin outlined a model in which the central bank would issue a wholesale or hybrid form of CBDC, while commercial banks would issue deposit tokens that are fully convertible and suitable for daily payments and settlement. This framework preserves the Bank of Korea’s control over the monetary base while giving regulated banks a central role in customer-facing digital finance.
Such an approach creates a structured hierarchy. The central bank remains responsible for the foundational layer of digital money, while commercial banks handle distribution and practical usage through tokenized deposits. In policy terms, this leaves little room for private issuers to dominate the top layer of Korea’s digital payment stack. Instead, innovation would be channeled through institutions already embedded in the country’s regulatory perimeter.
For the banking sector, the design is significant. Deposit tokens could allow banks to remain central to programmable finance, digital payments, and settlement services, even as money itself becomes more tokenized. For regulators, it offers a way to support innovation without surrendering visibility or control.
Project Hangang Phase 2 Moves Toward Real-World Use
A major part of Shin’s speech focused on Phase 2 of Project Hangang, the Bank of Korea’s flagship digital won pilot. The second phase began in March 2026 and has expanded to include nine major commercial banks. Unlike the first phase, which centered on technical testing of a blockchain-based digital won, Phase 2 is aimed at real-world functionality.
The pilot is now exploring use cases such as programmable money, compliance tools, and integration with South Korea’s existing payment infrastructure. The most eye-catching application under consideration is the use of digital currency rails for distributing government subsidies. According to the speech, the potential value of these subsidy-related use cases could reach as much as 110 trillion won, or roughly $73 billion.
That figure underscores the scale of what the Bank of Korea is evaluating. This is no longer a purely theoretical or sandbox-style exercise. The central bank is examining how digital won infrastructure could be used in public finance, retail-facing disbursement systems, and regulated settlement networks that touch millions of users and large fiscal flows.
From Technical Experimentation to Commercialization
South Korea’s CBDC work did not begin with Shin, but his tenure appears set to mark a transition from research and testing toward more applied deployment. Under previous leadership, the Bank of Korea advanced technical pilots and explored whether digital currency rails could support subsidy payments and other public-sector functions. Shin is now taking over at a stage where commercialization, interoperability, and institutional design matter more than proof-of-concept alone.
That transition is important because the questions are changing. Early CBDC work tends to focus on whether the technology works. Later-stage development asks whether the system fits into existing finance, whether it satisfies compliance demands, and whether it can scale without destabilizing the banking sector. Shin’s speech indicated that the Bank of Korea is now firmly in that second phase of thinking.
International Dimension: BIS Project Agora and Cross-Border Payments
Shin also highlighted the Bank of Korea’s participation in Project Agora, a cross-border tokenization initiative led by the Bank for International Settlements (BIS). The project is examining how multi-CBDC platforms could support faster and more efficient international payments and settlements. For South Korea, the initiative fits a broader ambition: expanding the role of the won in digital payment systems beyond national borders without loosening capital controls or creating financial instability.
The cross-border angle reflects a growing reality for central banks. Domestic digital currency systems may eventually need to connect with international settlement networks, especially in economies deeply integrated into trade and global finance. By participating in BIS-led experiments, the Bank of Korea is positioning itself not only as a domestic innovator but also as a contributor to emerging global standards around tokenized money.
Shin’s background helps explain that emphasis. Before becoming governor, he spent years at the BIS, serving first as an economic adviser and later as head of the monetary and economic department. His career there overlapped with multiple collaborative CBDC experiments, including projects involving South Korea. That experience gives him a strong international policy lens as he shapes the next stage of the digital won agenda.
Stablecoins Left Out as Regulation Advances
One of the most closely watched aspects of the speech was what Shin did not say. During his parliamentary confirmation process in mid-April, he had taken a more open tone, stating in written remarks that CBDCs and deposit tokens could coexist with stablecoins in both complementary and competitive ways. He also suggested that any stablecoin issuance should begin with regulated banks.
Yet in his first formal policy speech as governor, stablecoins were absent. Observers following the process interpreted the change in tone as intentional. With South Korea moving closer to finalizing the Digital Asset Basic Act, the omission may signal that the central bank wants the policy conversation to focus first on regulated public infrastructure and bank-based tokenization before opening broader space for private digital currency models.
This matters because stablecoin regulation is becoming one of the defining policy debates in digital assets worldwide. Some jurisdictions are trying to accommodate both public and private forms of digital money. South Korea, at least based on Shin’s latest message, appears more inclined to sequence the process carefully and prioritize official rails first.
Tighter Oversight for Crypto and Non-Bank Finance
Beyond CBDC policy, Shin’s speech also touched on several wider financial priorities. He said the Bank of Korea would pursue a “prudent and flexible” monetary policy approach during his term. He also referenced plans related to 24-hour foreign exchange trading, the development of an offshore won settlement system, and stronger oversight of crypto markets and non-bank financial institutions.
On supervision, Shin promised better data access for monitoring risks and closer observation of activities taking place outside the traditional banking sector. That point is especially relevant in an era when digital assets, payment innovations, and shadow-finance channels can transmit risk in ways that are harder for central banks to track using legacy tools.
The message was consistent with the broader structure of his policy vision: innovation is welcome, but only if it is accompanied by stronger transparency, institutional accountability, and regulatory reach.
What Shin’s First Speech Signals
Taken together, Shin Hyun-song’s first policy address points to a clear strategic direction for South Korea. The country is not stepping away from digital asset innovation. Instead, it is trying to shape that innovation through a tightly supervised architecture led by the central bank and distributed through commercial banks.
Phase 2 of Project Hangang shows that the digital won discussion is moving beyond theory and into practical deployment. The potential use of digital rails for government subsidies, the inclusion of nine banks, and the integration of compliance and settlement tools all suggest that Korea is testing whether tokenized money can operate at meaningful scale within a regulated framework.
At the same time, Shin’s omission of stablecoins sends an equally important message. South Korea may still leave room for private-sector participation in the future, particularly through regulated banks, but for now the policy emphasis is unmistakable: CBDC infrastructure and deposit tokens come first. In a global environment where many governments are still weighing how to balance innovation with control, the Bank of Korea has now drawn its line more clearly.