Bank of Korea Governor Endorses Won-Based Stablecoin Development

Bank of Korea Governor Rhee Chang-yong voiced support for developing a Korean won-pegged stablecoin during a Wednesday press conference, while warning of potential complications for foreign exchange management, according to The Korea Herald.

"I do see the need for a won-backed stablecoin. Let me be clear — I am not against it," Rhee said during the press conference at the central bank's headquarters. His comments address growing political pressure from South Korea's ruling Democratic Party, which has been advocating for legislation to allow non-banking institutions to issue won-denominated stablecoins.

The central bank governor clarified that concerns about monetary inflation from stablecoin issuance would depend on the specific structure and backing assets used. However, he highlighted potential challenges to foreign exchange controls, noting that "a won-based stablecoin could facilitate the conversion of won-denominated assets into dollar-based stablecoins, which could increase demand for foreign stablecoins and complicate forex management."

Rhee also raised questions about the broader implications for South Korea's banking sector. "We would need to consider the broader implications for bank profitability and structural changes if payment and settlement functions — traditionally handled by banks — are expanded to the non-banking sector," he said.

The governor indicated that the central bank would collaborate with the Ministry of Economy and Finance and the Financial Services Commission to establish appropriate regulatory measures for potential stablecoin implementation.

The stablecoin discussion emerged during a broader economic briefing where Rhee reviewed South Korea's inflation trajectory. Consumer prices rose 2.1% in the first five months of 2025, slightly higher than the 1.8% increase recorded in the final six months of 2024, but remaining close to the central bank's 2% target, the publication said.

Despite the moderate recent inflation rate, overall consumer prices have increased 15.9% from 2021 to May 2025, with essential items rising 19.1% during the same period, reflecting persistent cost-of-living pressures on South Korean households.

The Bank of Korea also addressed potential economic impacts from recent U.S. trade policies. The central bank suggested that U.S. tariff measures could actually help ease inflationary pressure in Korea due to the country's export dependence, with weaker global demand potentially leading to lower raw material prices.

Additionally, if China redirects low-cost goods to markets like Korea due to reduced U.S. exports, it could create further deflationary pressure. However, the BOK emphasized uncertainty around these projections, noting that factors such as won depreciation or supply chain disruptions could offset any downward price pressures.

South Korea's approach to stablecoin regulation comes as Asian financial hubs including Hong Kong and Singapore develop comprehensive frameworks for digital asset oversight, with several jurisdictions competing to attract stablecoin issuers and related fintech innovation.