BOK chief says he is not against won-based stablecoins but has forex concerns
FILE PHOTO: Rhee Chang-yong, Governor of the Bank of Korea, participates in a panel titled 'How Should Central Banks Battle High Inflation?' at the 2023 Spring Meetings of the World Bank Group and the International Monetary Fund in Washington, U.S., April 14, 2023. REUTERS/Elizabeth Frantz/File Photo
SEOUL (Reuters) -South Korea's central bank governor said on Wednesday he was not against issuing won-denominated stablecoins but had concerns about managing capital flows.
"Issuing won-based stablecoin could make it easier to exchange them with dollar stablecoin rather than working to reduce use of dollar stablecoin. That in turn could increase demand for dollar stablecoin and make it difficult for us to manage forex," Rhee Chang-yong told a press conference in Seoul.
Stablecoins, a type of cryptocurrency designed to maintain a constant value – typically pegged 1:1 to the U.S. dollar – are widely used by crypto traders to move funds between tokens, and are starting to be adopted by more and more companies.
Regulators in many countries are skeptical about cryptocurrencies as they are seen as speculative and as competitors to national currencies.
Rhee's comments come as South Korea's left-leaning President, Lee Jae Myung, is seen delivering on his election pledge to allow companies to issue won-based stablecoins.
The ruling Democratic Party proposed earlier this month the Digital Asset Basic Act, designed to set up regulatory infrastructure needed to help local companies issue won-denominated stablecoins.
President Lee appointed a former crypto firm chief, Kim Yong-beom, as his chief policy officer in his first week in office, further boosting speculation that the government would take action to allow issuance of stablecoins backed by the Korean won.
Kim has previously served as vice chairman of the Financial Services Commission before becoming chief executive of Hashed Open Research, a think tank affiliated with crypto venture capital firm Hashed Ventures Inc.
Governor Rhee has previously told reporters that allowing stablecoins to be issued by local companies, rather than the central bank, could significantly undermine the effectiveness of monetary policy and capital flow control.
(Reporting by Jihoon Lee; Editing by Tom Hogue and Muralikumar Anantharaman)
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