In his first major policy address as governor of the Bank of Korea, Shin Hyun-song sent a clear message about the future of digital money in South Korea: the country’s monetary architecture should be built around a central bank digital currency (CBDC) and bank-issued deposit tokens, not privately issued stablecoins. The speech, delivered shortly after he took office on April 21, marked one of the strongest signals yet that Seoul’s central bank wants to keep the core of the digital won project firmly inside a regulated public-private framework.
The omission of stablecoins was especially notable because South Korea is actively discussing digital asset rules under the proposed Digital Asset Basic Act. Against that backdrop, Shin’s choice to emphasize CBDCs and deposit tokens—while leaving private won-based stablecoins out of the spotlight—was widely interpreted as a deliberate policy cue. Rather than opening the top layer of the monetary stack to private issuers, the Bank of Korea appears to favor a system in which the central bank anchors trust and commercial banks handle distribution and retail-facing use cases.
A Two-Tier Digital Money Model
Shin outlined a model centered on a two-layer structure. In this framework, the Bank of Korea would issue a wholesale or hybrid CBDC, while commercial banks would issue deposit tokens that are fully redeemable and designed for everyday payments and settlement. This approach seeks to combine the stability and oversight of central bank money with the flexibility and customer reach of the banking sector.
Such a structure also preserves the role of traditional financial institutions at a time when many jurisdictions are debating whether digital money should be delivered directly by central banks or through intermediaries. Under Shin’s preferred architecture, commercial banks remain central to payment innovation, programmable finance, and transaction services, while the central bank retains oversight over the monetary base and systemic stability.
The design leaves limited room for private stablecoins to become the dominant settlement asset in the domestic monetary system. That does not necessarily mean private digital assets will disappear from the conversation, but it does suggest they are not the Bank of Korea’s preferred first-choice infrastructure for the future of the won.
Phase 2 of Project Hangang Moves Into Real-World Testing
Shin placed particular emphasis 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. This marks a significant step beyond the first phase, which was more heavily focused on technical testing of a blockchain-based digital won environment.
According to the speech, the current phase is designed to increase the practical utility of both CBDCs and deposit tokens. Instead of limiting the effort to lab conditions, the second phase is exploring real transaction flows and applied use cases. Among the most important potential applications is the distribution of government subsidies, with a target scope of up to 110 trillion won, or approximately $73 billion.
That figure underlines the scale of the experiment. If these trials prove successful, South Korea could move closer to using regulated digital money rails for public disbursements, payment automation, compliance-by-design tools, and more efficient settlement. The broader implication is that the project is no longer merely about demonstrating technical feasibility; it is increasingly about integrating digital currency infrastructure into the real economy.
Phase 2 is also examining programmable money functions, embedded compliance features, and interoperability with the country’s existing payment infrastructure. These are critical areas for any central bank digital currency effort, especially in a market as technologically advanced and payments-intensive as South Korea.
Stablecoins Missing From the Headline Message
Observers quickly focused on what Shin did not say. During his parliamentary confirmation process in mid-April, he had struck a comparatively more open tone, stating in written responses 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.
By contrast, his inaugural policy speech omitted stablecoins entirely. Analysts following the transition viewed the tonal shift as meaningful rather than accidental. It suggests that once in office, Shin chose to foreground a state-led digital won model, one that prioritizes regulated infrastructure and monetary control over broader private-sector experimentation at the top level of digital payments.
This distinction matters because South Korea is one of the most active digital asset markets in Asia, and the country’s eventual stance on won-denominated stablecoins could influence not only domestic fintech competition but also regional policy thinking. For now, the central bank’s hierarchy appears clear: CBDC first, bank deposit tokens second, private stablecoins somewhere further down the policy agenda.
International Experience and Cross-Border Ambitions
Shin brings substantial international experience to the role. Before becoming governor, he served at the Bank for International Settlements (BIS) from 2014 until early 2026, first as an economic adviser and later as head of the monetary and economic department. His tenure at the BIS overlapped with several collaborative CBDC projects involving multiple jurisdictions, including efforts connected to South Korea.
That background was visible in another theme of his speech: cross-border digital payments. Shin referenced the Bank of Korea’s involvement in Project Agora, a BIS-led initiative studying tokenization and multi-CBDC platforms for international payments and settlement. The goal is to make cross-border transfers faster and more efficient while preserving macro-financial safeguards.
For South Korea, this is about more than technological prestige. The central bank sees digital payment innovation as a way to expand the role of the won in global digital commerce without loosening capital controls or undermining financial stability. In other words, the Bank of Korea appears to be pursuing modernization with guardrails rather than liberalization for its own sake.
Broader Policy Agenda: FX Reform and Crypto Oversight
Digital currency was only one part of Shin’s broader policy agenda. He also highlighted plans related to 24-hour foreign exchange trading, the creation of an offshore won settlement system, and tougher oversight of both crypto markets and non-bank financial institutions. These priorities suggest that the new governor is approaching digital finance not as a narrow innovation file, but as part of a wider modernization effort across payments, currency markets, and supervisory systems.
He said the Bank of Korea would pursue a monetary policy stance that is “prudent and flexible” during his term. At the same time, he pledged stronger access to data and closer monitoring of activity outside the traditional banking sector. That matters because crypto market risks, shadow finance, and non-bank liquidity channels have become increasingly important to central banks trying to understand how financial instability might spread in a more digitized system.
The emphasis on surveillance and data access also aligns with the practical design of CBDCs and deposit tokens. One of the selling points of regulated digital money infrastructure is that it can enable compliance controls, transaction visibility, and risk management tools that are harder to impose in fragmented or privately dominated payment ecosystems.
From Technical Pilot to Commercialization Stage
South Korea’s CBDC journey has been evolving over more than one central bank administration. Shin’s predecessor, Rhee Chang-yong, oversaw technical pilots and helped move the digital won discussion from concept to structured experimentation. Under Shin, the project appears to be entering a new phase focused more explicitly on commercialization pathways, practical implementation, and institutional design.
This transition is important. Many CBDC efforts globally have remained stuck in research mode, where proofs of concept generate headlines but do not translate into public use. South Korea now appears to be testing whether digital money can support concrete functions such as subsidy delivery, regulated settlement, and programmable financial services at meaningful scale.
The involvement of nine commercial banks reinforces this direction. Instead of displacing the banking sector, the Bank of Korea is trying to enlist it as the operating layer of the digital won ecosystem. Deposit tokens could give banks a direct role in distributing digital money while preserving convertibility and trust under central bank supervision.
That balance may prove politically and economically attractive. It supports innovation without forcing a radical break from the existing financial system, and it offers a potential compromise between public control and market participation. At the same time, it reduces the likelihood that private stablecoins will gain top-tier status in Korea’s domestic payment architecture—at least in the near term.
What the Speech Signals for South Korea’s Digital Future
The clearest takeaway from Shin’s first policy speech is that South Korea’s central bank is moving from abstract digital currency debate toward an implementation strategy grounded in regulation, banking-sector participation, and state-backed settlement infrastructure. The message was not anti-innovation. Rather, it was a statement about where trust, control, and systemic responsibility should sit in a digitized monetary system.
By prioritizing a CBDC-plus-deposit-token model, advancing the second phase of Project Hangang, and tying domestic work to cross-border initiatives like Project Agora, the Bank of Korea is sketching out a digital won vision that is both ambitious and tightly managed. With private stablecoins absent from the central narrative, the direction of travel is increasingly clear: South Korea wants the next generation of money to be digital, programmable, and interoperable—but also firmly regulated from the start.