South Korea’s new central bank governor has used his first major policy address to send a clear message about the future of digital money in the country: the Bank of Korea wants that future built around a central bank digital currency (CBDC) and bank-issued deposit tokens, not private stablecoins.
In his inaugural policy speech, Shin Hyun-song, who took office on April 21, 2026, framed the digital won as part of a regulated, layered monetary system in which the central bank remains at the core and commercial banks play a central role in distribution. The absence of any direct emphasis on won-based stablecoins stood out immediately, especially as South Korea continues discussing digital asset rules under the proposed Digital Asset Basic Act.
A state-led architecture for digital money
Shin’s remarks point to a two-tier model. In that structure, the Bank of Korea would issue a wholesale or hybrid CBDC, while commercial banks would issue deposit tokens that are fully convertible and designed for everyday payments and settlements. This framework preserves central bank oversight while still giving private-sector banks a meaningful function in the circulation of digital money.
The significance of that design is difficult to miss. Rather than positioning private stablecoins as a core pillar of the future payments system, the model places regulated institutions at every critical layer. The central bank controls the foundation, and commercial banks distribute tokenized claims within a regulated environment. That approach appears intended to combine innovation with monetary control, compliance, and financial stability.
Project Hangang moves into practical use cases
The new governor put particular emphasis on Phase 2 of Project Hangang, the Bank of Korea’s flagship digital won pilot. According to the speech, this stage began in March 2026 and has now expanded to include nine major commercial banks. While the first phase focused largely on technical testing of a blockchain-based digital won, the second phase is aimed at practical deployment and real transaction testing.
The Bank of Korea is now exploring broader utility for programmable money, compliance tools, and integration with South Korea’s existing payments infrastructure. One of the most notable use cases under review is the possible distribution of government subsidies through the digital currency framework. The potential volume is substantial: up to 110 trillion won, or about $73 billion.
That figure underscores the scale of the central bank’s ambition. Rather than limiting the CBDC initiative to a narrow pilot environment, policymakers appear to be testing whether digital won infrastructure can support major public-sector payment flows. If successful, such use cases could move the project from a technical experiment toward a meaningful component of national financial plumbing.
Stablecoins omitted as legislation advances
The omission of stablecoins from Shin’s first policy speech drew attention because the topic had not been entirely absent from earlier discussions. During his parliamentary confirmation process in mid-April, Shin had struck a more open tone. In written responses to lawmakers, he said that CBDCs and deposit tokens could coexist with stablecoins in a complementary and competitive way, while also suggesting that any stablecoin issuance should begin with regulated banks.
That makes the shift in emphasis all the more notable. Observers following South Korea’s policy debate see the change in tone as deliberate rather than incidental. In practical terms, the speech suggests that the Bank of Korea is seeking to promote a government-centered digital won strategy at a time when the country is still refining the legal framework for digital assets.
South Korea’s debate is taking place against a broader global backdrop. In many jurisdictions, policymakers are weighing whether digital money should be led by central banks, by regulated financial institutions, or by private issuers. Shin’s first address places South Korea firmly in the camp that prefers regulated interoperability over open-ended private issuance at the top layer of the monetary system.
Commercial banks remain central to the plan
One of the clearest implications of Shin’s framework is that commercial banks are not being pushed aside by CBDC development. On the contrary, deposit tokens would keep banks at the center of digital money distribution. That gives them a direct role in programmable finance, payments innovation, and customer-facing digital settlement, while preserving the central bank’s supervisory authority.
For the banking sector, that may be a meaningful opportunity. Deposit tokens could allow banks to modernize payment rails and participate in tokenized finance without ceding monetary credibility to unregulated issuers. For regulators, the structure may offer a middle path: innovation can move forward, but within institutions already subject to prudential oversight, data reporting, and compliance requirements.
Cross-border ambitions through Project Agora
Shin also linked South Korea’s CBDC work to the country’s participation in Project Agora, a cross-border tokenization initiative led by the Bank for International Settlements (BIS). The project is examining multi-CBDC platforms for faster international payments and settlements. In Shin’s framing, this work supports a broader policy goal of expanding the won’s role in digital global payments without undermining capital controls or destabilizing the domestic financial system.
That international angle is especially relevant given Shin’s professional background. Before becoming governor, he spent years at the BIS, first as an economic adviser and later as head of the monetary and economic department, serving there from 2014 to early 2026. His tenure overlapped with several cooperative CBDC experiments, including projects involving South Korea. He also has an academic background, including experience at Princeton University.
This combination of central banking, international coordination, and academic economics may shape how the Bank of Korea balances innovation with caution. The speech suggests that Shin sees digital currency infrastructure not simply as a domestic payments upgrade, but as part of a broader monetary strategy with implications for cross-border settlement, regulatory control, and the future position of the won.
Tighter monitoring of crypto and non-bank finance
Beyond digital won development, Shin outlined other priorities for his term. These include 24-hour foreign exchange trading, the development of an offshore won settlement system, and stricter monitoring of both crypto markets and non-bank financial institutions. He said the Bank of Korea would pursue a “prudent and flexible” monetary policy stance and improve data access to better track risk outside the traditional banking system.
That part of the speech matters because it places the CBDC agenda within a wider supervisory framework. The Bank of Korea is not treating digital money as a standalone innovation project. Instead, it appears to be embedding it into a larger strategy that includes market surveillance, financial stability oversight, and payment system reform.
For crypto markets, the implication is not necessarily outright hostility, but a more disciplined regulatory environment. Shin’s comments suggest that authorities want stronger visibility into activity occurring beyond conventional financial channels, particularly in sectors where leverage, liquidity risk, or insufficient disclosure could create spillover effects.
From pilot stage to commercialization phase
South Korea’s CBDC work did not begin with the new governor. Under previous leadership, the Bank of Korea had already advanced technical pilots and explored public-payment applications such as subsidies. What changes under Shin is the sense that the project is entering a more commercial and institutional phase.
The transition from Phase 1 to Phase 2 of Project Hangang captures that shift. The first stage was largely about whether the technology could work. The second is about whether it can be used at scale, connected to existing systems, and incorporated into the routines of public finance and everyday settlement. That is a very different challenge, one that requires not only technical readiness but also legal clarity, banking cooperation, and policy discipline.
Based on Shin’s first speech, the Bank of Korea appears determined to move forward with a model that is regulated, interoperable, and bank-mediated. Private stablecoins may still remain part of the policy debate, especially as legislation evolves, but they were clearly not given center stage in this opening statement.
For now, the direction is unmistakable: South Korea’s digital money future, at least in the eyes of its new central bank chief, will be led by the digital won and by regulated financial institutions operating under central bank oversight.