The Governor of the Central Bank of South Korea warns: Promoting the country's encryption stablecoin plan may backfire.

The Central Bank of South Korea recently issued a warning regarding the Korean won stablecoin plan, believing it may inadvertently strengthen the position of the US dollar.

Central Bank Governor Lee Chang-yong pointed out at a press conference on Wednesday that issuing a Korean won stablecoin may stimulate market demand for the exchange of US dollar stablecoins, which contradicts President Yoon Suk-yeol's digital financial strategy to internationalize the Korean won.

The current global stablecoin market size has exceeded 260 billion USD, with the market value of stablecoins denominated in USD accounting for over 97%, highlighting the competitive pressure faced by the Korean won stablecoin.

Although the presidential office advocates for the development of the Korean won stablecoin to curb capital outflow, the Central Bank is more concerned about potential risks. Central Bank Governor Lee Chang-yong emphasized that South Korea needs to prioritize establishing a regulatory framework to address the current two major challenges: first, the shift of payment and settlement services from the banking system to non-bank institutions may weaken the stability of traditional finance; second, the increase in cross-border capital flows complicates foreign exchange management. Therefore, he also specifically called for an assessment of changes in the profitability of the banking industry in the context of the rise of stablecoins, and requested the formulation of a more comprehensive financial transformation roadmap.

This policy divergence emerged at a critical time when the US "GENIUS Act" was just passed, which will allow the rapid expansion of the US dollar stablecoin globally. It is expected that South Korea's Ministry of Economy and Finance and the Financial Services Commission will collaborate with the Central Bank of Korea to formulate policies, but how to balance monetary sovereignty with financial stability remains a core challenge faced by the South Korean won stablecoin strategy.

According to data from last year, the Korean won accounted for less than 5% of international settlements. If not handled properly, the digital currency revolution may actually reinforce the dominance of the US dollar.

In summary, the warning from the Governor of the Central Bank of Korea highlights the complexity and risk factors of monetary policy in the era of digital currency. The planned implementation of the Korean won stablecoin not only concerns monetary sovereignty but also involves the stability of the domestic financial system and the balance of the global monetary system.

Therefore, in the context of the global expansion of the US dollar stablecoin, how South Korea formulates appropriate policies and balances innovation with risk will be a significant test of its financial wisdom.

How do you think South Korea should reasonably formulate its stablecoin policy? See you in the comments!

#韩国央行 # stablecoin #数字货币 # currency sovereignty