Bank of Korea Governor Shin Hyun-song, inaugurated April 21, used his first address to place central bank digital currency and bank-issued deposit tokens at the center of South Korea's digital money strategy. Stablecoins were not mentioned. The omission was deliberate: Shin, who spent 12 years at...
"We have to ask what the role of the central bank is at a time of great transformation." — Shin Hyun-song, Governor, Bank of Korea
Bank of Korea Governor Shin Hyun-song, inaugurated April 21, used his first address to place central bank digital currency and bank-issued deposit tokens at the center of South Korea's digital money strategy. Stablecoins were not mentioned. The omission was deliberate: Shin, who spent 12 years at the Bank for International Settlements and published research arguing stablecoins fragment payment systems, is architecting a state-led model in which a wholesale CBDC feeds tokenized commercial bank deposits used by the public for everyday payments.
The policy direction has immediate consequences for a market where 11 million registered crypto investors generated $110 billion in capital outflows to offshore exchanges in 2025 alone, and where a comprehensive Digital Asset Basic Act remains stalled over the question of who may issue won-pegged stablecoins. Korea's approach — CBDC first, deposit tokens second, stablecoins third — sets up the fourth-largest economy in Asia as a test case for whether central-bank-led digital money can compete with private-sector alternatives already operating at scale.
Shin Hyun-song began his four-year term as Bank of Korea governor on April 21, 2026, at BOK headquarters in Seoul. He was appointed by President Lee Jae Myung and endorsed by the National Assembly's Strategy and Finance Committee, succeeding Gov. Rhee Chang-yong.
His inaugural speech outlined five priorities: cautious monetary policy amid Middle East-driven supply shocks, enhanced macroprudential oversight of hedge funds and crypto assets, won internationalization through 24-hour foreign exchange trading, advancement of Project Hangang's CBDC infrastructure, and expanded early-warning financial stability systems using market-price indicators.
On digital currency, the architecture Shin described is a two-tier model. The Bank of Korea issues a wholesale CBDC — digital central bank money available to financial institutions. Commercial banks then create deposit tokens fully convertible into it, which the public uses for payments. The design embeds AML and KYC requirements at the protocol level, not as aftermarket compliance layers.
Shin's prior role matters. He served as BIS economic adviser from May 2014 to March 2026 and as head of the BIS Monetary and Economic Department from January 2025. He held academic posts at Oxford, the London School of Economics, and Princeton, and served as an adviser to the Bank of England, the IMF, and the Federal Reserve. He is not a crypto skeptic but a monetary system architect who views private tokens as failing to satisfy the "unity" property of money — the principle that all forms of a currency trade at par.
In his speech, Shin pledged to "strengthen macroprudential policy by tightening oversight of nontraditional financial products such as hedge funds and cryptocurrencies" and to "improve access to information on the non-bank sector, reflecting the expansion of non-bank finance and stronger linkages across markets."
Project Hangang is the BOK's CBDC test bed, and it has already produced real-world data.
Phase 1 (April–June 2025):
Phase 2 (launched March 18, 2026):
The government subsidy use case is economically significant. South Korea's annual budget is approximately $499 billion, with a substantial portion — roughly 110 trillion won — flowing through subsidy channels. Directing even a fraction through programmable deposit tokens would reduce administrative costs and misuse while generating data on real-world CBDC velocity and usage patterns.
The word "stablecoin" did not appear in Shin's inaugural address. This is consistent with a position he articulated during his confirmation hearing on April 14, when he stated that a won-based stablecoin could eventually be introduced but should remain secondary to CBDC and deposit tokens, with trust and compliance as prerequisites.
The absence is politically charged. South Korea's Digital Asset Basic Act, intended to create a unified rulebook replacing the term "virtual assets" with "digital assets," remains stalled in the National Assembly. The central dispute: whether won-pegged stablecoin issuance should be limited to commercial banks or opened to fintech and technology firms.
The draft legislation proposes a "Korean-style stablecoin" built on a consortium structure requiring banks to hold at least 51% equity, with technology companies participating as minority stakeholders. All issuers would face a minimum capital reserve of 5 billion won ($3.5 million) and must maintain reserves exceeding 100% of circulating supply, held at banks or approved institutions and segregated from the issuer's balance sheet.
Shin's silence on stablecoins effectively reinforces the BOK's institutional position: the central bank prefers a model where it controls the base layer (wholesale CBDC), regulated banks control the consumer layer (deposit tokens), and stablecoins occupy a peripheral role for tokenized asset trading and programmable payments — not as general-purpose money.
The policy stakes are quantifiable. According to CoinGecko and Tiger Research data, $110 billion in crypto capital left South Korea in 2025 as domestic exchanges failed to offer the derivatives, leverage, and sophisticated trading products available on offshore platforms. Fifty-seven percent of that volume migrated to Binance.
South Korea's crypto market remains structurally important: the country accounts for approximately 30% of global crypto trading volume, with 11 million registered investors — roughly one-fifth of the population. Daily domestic trading volume averages 5.4 trillion won ($4 billion), a 15% decline from H1 2025. The market is dominated by two exchanges — Upbit and Bithumb — holding approximately 87% market share.
The $110 billion outflow represents a policy failure that Shin inherits. The Virtual Asset User Protection Act, which took effect in 2024, addressed investor protection but left market structure — leverage, derivatives, institutional access — unregulated. Corporate crypto trading was restricted until recent policy shifts began opening access.
The CBDC strategy can be read partly as a response to this competitive pressure. By building state-controlled digital payment infrastructure, the BOK creates an alternative rails system that keeps transaction data, economic activity, and regulatory oversight within domestic jurisdiction — regardless of what happens on offshore crypto exchanges.
Korea's approach positions it within a global divergence on digital money architecture.
China (e-CNY): The largest CBDC pilot globally, with transaction volume reaching 7 trillion e-CNY ($986 billion) across 17 provincial regions as of June 2024. On January 1, 2026, China introduced interest-bearing e-CNY wallets, pivoting from digital cash to digital deposit money. This broke with the consensus held by most central banks that CBDCs should not pay interest to avoid destabilizing commercial bank deposits.
European Central Bank (Digital Euro): The ECB announced in October 2025 that its digital euro project would advance to a pilot exercise in 2027, with potential first issuance by 2029 contingent on 2026 legislation. The ECB has been explicit: the digital euro will not pay interest and will include holding limits to prevent bank deposit flight.
United States: No active CBDC program. Federal legislation has effectively banned CBDC development, leaving digital dollar innovation to private stablecoin issuers operating under frameworks like the proposed GENIUS Act and CLARITY Act.
Korea's model sits between China's aggressive deposit-token approach and Europe's cautious digital-cash design. Like China, Korea uses tokenized commercial bank deposits as the consumer-facing layer. Like Europe, Korea has not signaled interest-bearing CBDC wallets. Unlike either, Korea is simultaneously negotiating a stablecoin framework through the Digital Asset Basic Act, creating a three-tiered hierarchy: CBDC, deposit tokens, then stablecoins.
Korea's CBDC program connects to the BIS-led Project Agora, a cross-border payment tokenization initiative launched in April 2024. The project brings together seven central banks — Bank of France (Eurosystem), Bank of Japan, Bank of Korea, Bank of Mexico, Swiss National Bank, Bank of England, and Federal Reserve Bank of New York — along with 41 private-sector financial institutions.
Project Agora investigates how tokenized commercial bank deposits can integrate with tokenized wholesale central bank money on a unified financial platform. It entered its testing phase in January 2026, with a report on initial findings expected in H1 2026.
Shin's prior role at the BIS makes him the only sitting central bank governor who was directly involved in designing the Project Agora architecture. This personal continuity between the BIS innovation hub and the BOK governor's office is unusual and gives Korea outsized influence in shaping the cross-border CBDC settlement standards that may emerge from the project.
His stated priority to "pursue 24-hour forex market operation and establish an offshore won settlement system" aligns directly with Project Agora's objectives: reducing the cost and friction of cross-border won settlement through tokenized infrastructure.
CBDC-first hierarchy established. Shin's inaugural address formalizes a three-tier digital money architecture for South Korea: wholesale CBDC at the base, bank deposit tokens for consumers, stablecoins as peripheral tools. This is now official BOK policy.
Project Hangang Phase 2 is live. Nine banks are testing deposit tokens with biometric authentication, P2P transfers, and government subsidy distribution. Large-scale deployment targets H2 2026.
Stablecoin legislation remains stalled. The Digital Asset Basic Act's 51% bank-ownership requirement for stablecoin consortiums has created a legislative impasse. Shin's omission of stablecoins from his speech does not resolve the dispute.
$110B capital flight looms over policy. Korea's restrictive trading rules drove massive offshore migration in 2025. The CBDC strategy addresses the domestic payments layer but does not directly resolve the derivatives and leverage gap that caused the outflows.
BIS-to-BOK pipeline creates unique positioning. Shin's 12-year BIS tenure, including involvement in Project Agora, gives Korea disproportionate influence in emerging cross-border CBDC standards.
South Korea is executing a state-led digital money strategy with more ambition and structural detail than most G20 economies. The two-tier model — wholesale CBDC plus tokenized bank deposits — has produced real transaction data through Project Hangang and connects to cross-border infrastructure through Project Agora. Shin Hyun-song's appointment brings institutional continuity from the BIS, the organization that has most aggressively advocated for central-bank-led digital currency architecture.
The unresolved tensions are visible. The $110 billion in 2025 capital outflows demonstrates that Korean crypto users will route around restrictive domestic infrastructure. The stalled Digital Asset Basic Act shows that even within Korea's regulatory establishment, consensus on private stablecoin issuance does not exist. And the question of whether state-designed deposit tokens can compete with privately issued stablecoins on usability, programmability, and cross-chain interoperability has not been answered by any CBDC pilot globally — including Korea's.
What is clear: Korea has chosen its architecture. The market will determine whether that architecture is sufficient.