Bank of Korea Governor Shin Hyun-song used his first major policy address after taking office to draw a clear line on the future of digital money in South Korea: the country’s monetary transition should be led by a central bank digital currency (CBDC) and bank-issued deposit tokens, not by privately issued stablecoins.
The speech, delivered on April 21 after Shin began his four-year term, was closely watched because South Korea is simultaneously debating the legal framework for digital assets under the pending Digital Asset Basic Act. Against that backdrop, the governor’s decision not to mention won-denominated stablecoins stood out immediately. For many observers, that omission was not accidental. It suggested that the central bank wants the digital won ecosystem to develop within a tightly regulated, state-first structure centered on the Bank of Korea and licensed commercial banks.
A Two-Tier Digital Money Model
In Shin’s framework, South Korea would operate a two-layer system. The Bank of Korea would issue a wholesale or hybrid CBDC, while commercial banks would distribute deposit tokens fully convertible with bank deposits for day-to-day payments and settlement. This architecture preserves the role of banks in money distribution while keeping the core monetary layer under central bank control.
That design leaves little room for private issuers to dominate the upper layer of the payment stack. Rather than endorsing an open market in won-backed stablecoins, the speech pointed to a model where innovation is permitted inside the regulated banking perimeter. In practical terms, the message was that digital currency modernization should not come at the cost of monetary sovereignty, supervisory clarity, or financial stability.
Project Hangang Moves Into Applied Use
The clearest example of this strategy is Project Hangang Phase 2, the Bank of Korea’s flagship digital won pilot. Shin highlighted the project as a key mechanism to expand the real-world usability of both CBDC and deposit tokens. Phase 2 launched in March 2026 and has now expanded to nine major commercial banks, marking a significant step beyond earlier technical experimentation.
Unlike the first phase, which focused mainly on testing a blockchain-based digital won at the technical level, the second phase is designed around implementation. The program is exploring how programmable money can be used in actual financial workflows, how compliance functions can be built into tokenized payment systems, and how digital won infrastructure can connect with South Korea’s existing payment rails.
One of the most notable use cases under review is the distribution of government subsidies. According to the material referenced in the report, these potential applications could cover as much as 110 trillion won, or roughly $73 billion. That figure underscores the scale at which the central bank is thinking about tokenized public disbursement and the broader role of digital sovereign money in fiscal operations.
Stablecoin Silence Sends a Strong Signal
The omission of stablecoins from Shin’s inaugural address drew attention not only because of current legislative debates, but also because it contrasted with his own remarks during the confirmation process. In written responses to lawmakers in mid-April, Shin had taken a more open tone, saying that CBDCs, deposit tokens, and stablecoins could potentially coexist in a relationship that was both supplementary and competitive. He also suggested that any stablecoin issuance should begin with regulated banks.
His first speech as governor, however, shifted the emphasis decisively. By centering the conversation on CBDC and deposit tokens alone, Shin appeared to move from theoretical coexistence to institutional prioritization. The practical implication is that South Korean policymakers may still allow stablecoins under future law, but the Bank of Korea wants to ensure they do not become the foundational layer of the digital won system.
That distinction matters in a market where lawmakers, regulators, and financial institutions are all trying to define the balance between innovation and control. A bank-centered token model gives authorities stronger oversight, clearer reserve structures, and a more direct link to the existing financial system than a fragmented field of private issuers would provide.
Cross-Border Payments and the Global Role of the Won
Shin also tied domestic digital money development to international payment ambitions. He referenced the Bank of Korea’s participation in Project Agora, a cross-border tokenization initiative led by the Bank for International Settlements (BIS). The initiative examines multi-CBDC arrangements that could make international payments and settlement faster and more efficient.
For South Korea, that work is not just about payment technology. It is also about enhancing the role of the Korean won in global digital finance. At the same time, Shin signaled that such ambitions would not come at the expense of macroprudential safeguards. He explicitly linked innovation with the need to avoid destabilizing the financial system or loosening capital controls. In other words, the central bank is interested in modernizing cross-border infrastructure, but only within a framework that preserves policy discipline.
Broader Agenda: FX Reform and Tighter Crypto Oversight
Digital money was the centerpiece of the speech, but it was not the only priority. Shin also highlighted plans related to 24-hour foreign exchange trading, the development of an offshore won settlement system, and stronger supervision of both crypto markets and non-bank financial institutions. He said the Bank of Korea would maintain a “cautious and flexible” monetary policy stance during his term.
On the regulatory front, he indicated that the central bank would seek better access to data for risk monitoring and increase scrutiny of activity outside the traditional banking sector. That suggests crypto markets and shadow-finance segments could face more intensive oversight as the authorities try to map digital-asset risks more precisely into the broader financial stability framework.
Why Banks Stand to Benefit
One of the clearest winners under Shin’s preferred model may be the commercial banking sector. Deposit tokens place banks at the center of distribution, consumer-facing payments, and programmable finance. They preserve the relevance of regulated institutions in a tokenized economy while allowing the central bank to retain control over the foundational monetary layer.
This approach can be interpreted as an attempt to modernize the financial system without disintermediating banks. Instead of bypassing deposit institutions, the model gives them a direct role in the next generation of payment infrastructure. For policymakers, that may be a more politically and operationally manageable route than introducing a retail CBDC system that competes more directly with bank deposits.
A BIS-Trained Governor Brings Continuity and Discipline
Shin’s background helps explain the shape of the strategy. Before taking the top role at the Bank of Korea, he served for years at the BIS, including as Economic Adviser and later as Head of the Monetary and Economic Department. His tenure there overlapped with several collaborative CBDC experiments, including projects involving South Korea. He also held academic positions earlier in his career, including at Princeton University.
That combination of international policy experience and central banking research appears to be informing his approach: innovation is welcome, but only if it is interoperable, measurable, and embedded in a robust institutional framework. South Korea’s CBDC effort began under his predecessor, Rhee Chang-yong, who advanced technical pilots and explored subsidy-related applications. Under Shin, the initiative now appears to be entering a more commercially oriented phase, but one still defined by public-sector leadership and regulated bank participation.
As South Korea finalizes its broader digital asset legislation, Shin’s first speech offers a strong clue about the direction of travel. The central bank is not rejecting digital finance. It is trying to shape it on its own terms, with the digital won and bank-issued deposit tokens at the center, and with private stablecoins, at least for now, clearly outside the main policy spotlight.