Shin Hyun-song, the new governor of the Bank of Korea (BOK), has set a clear course for the country’s digital money strategy, pledging to accelerate work on a central bank digital currency (CBDC) and bank-issued deposit tokens.
Speaking at his inauguration ceremony in Seoul on Tuesday, Shin outlined a four-year agenda that prioritizes digital financial infrastructure while keeping economic stability and payment security at the core of policy.
Focus on cbdc, payment security and the won’s global role
Shin, formerly head of the Monetary and Economic Department at the Bank for International Settlements (BIS), said the BOK will:
- strengthen the security and resilience of Korea’s payment systems
- enhance the international usability of the Korean won
- step up work on project hangang, the country’s CBDC pilot, which is entering its second phase this year
At the same time, the BOK will deepen participation in cross-border projects such as project agora, an international initiative to test tokenized assets for faster, cheaper global payments. The move aligns with South Korea’s push to raise the won’s profile in a world moving toward digital settlements.
Two-tier digital currency model takes shape
Shin’s remarks confirm the authorities’ preference for a two-tier digital currency structure:
- the BOK issues a wholesale CBDC to financial institutions
- commercial banks then issue deposit tokens to the public for everyday use
Under this model, banks remain the main point of contact for a future digital won, leveraging their existing infrastructure, compliance systems and customer networks.
Project hangang enters second phase with real-world use cases
Project hangang is accelerating as it moves from proof-of-concept to practical trials:
- participating banks expand from seven to nine commercial banks
- the project shifts from technical tests to real-world applications
A central new use case is the distribution of government subsidies via digital currency. Authorities are examining how a portion of the country’s 110 trillion won (about $73 billion) in annual grants could be processed through the CBDC system.
Phase one, completed in August 2025, recorded low usage:
- around 81,000 users
- just over 114,000 transactions
Officials aim to improve engagement in phase two by adding peer-to-peer transfers and biometric authentication, making CBDC tools closer to familiar retail payment apps.
Stablecoin regulation advances on a separate track
Despite the detailed focus on CBDCs and deposit tokens, Shin did not mention stablecoins in his inauguration speech, even as they remain a contentious policy topic.
Under president Lee Jae-myung, work continues on the digital asset basic act, which would establish a comprehensive framework for digital assets, including domestic stablecoins. The bill has been delayed until after the June 3 regional elections but remains a key legislative priority.
Drafts of the act suggest a tight regime for privately issued stablecoins, likely to be supervised under existing laws such as the foreign exchange transactions act. Proposals include:
- requiring issuers to be fully licensed entities
- mandating reserves larger than the value of stablecoins in circulation
- prohibiting interest payments on stablecoin balances
These rules would set a more restrictive path for non-bank stablecoins compared with state-linked digital money.
Shift in central bank stance after earlier cbdc pause
Major Korean financial institutions have been building out stablecoin and digital payment services in anticipation of regulatory change. Their expansion coincided with a period when the BOK slowed some aspects of CBDC development last year, as won-pegged stablecoins gained traction.
Shin’s appointment signals a renewed emphasis on CBDC and deposit tokens.
While at the BIS, Shin co-authored work arguing that stablecoins could not fully replace sovereign currencies due to fragmentation and varying risk profiles. More recently, he has acknowledged that CBDCs and stablecoins could coexist in a tightly regulated environment, serving different functions within the broader financial system.
Under the emerging design:
- CBDC and bank-issued deposit tokens would form the backbone of official digital payments
- stablecoins could operate as supplementary tools, particularly where they meet strict regulatory and reserve standards
Maturing digital asset market faces lower retail trading
The policy shift comes as South Korea’s digital asset market shows signs of maturing.
A Tiger Research report shows that by late 2025:
- about 11.13 million people, or 21% of the population, held digital assets
- average daily trading volume fell 15% to 5.4 trillion won (about $4 billion) in the second half of 2025
- operating profits at exchanges dropped 38% over the same period
The data suggests high penetration but cooling retail activity, as more participants shift from speculative trading toward longer-term holding or wait for clearer regulation.
Key indicators to watch for market participants
For traders and financial institutions, several milestones will define the shape of Korea’s digital money landscape:
- progress of the digital asset basic act
The final text will determine the regulatory boundaries for non-bank stablecoins and other digital assets, including licensing, reserve rules and product design limits. - public uptake in project hangang phase two
Usage levels for peer-to-peer transfers, biometric log-ins and government subsidy payments will signal how much room there is for bank-issued deposit tokens versus privately issued alternatives. - outcomes from project agora
The BOK is one of seven central banks participating in project agora, alongside more than 40 financial institutions. The project’s real-world testing phase is under way, with a report expected in the first half of 2026. Its findings could shape future standards for cross-border settlement and determine how far tokenized assets are integrated into global payment rails.
Emerging divide inside the domestic stablecoin market
A key fault line is likely to emerge between:
- highly regulated, bank-centric stablecoins that align closely with the CBDC and deposit token framework
- more loosely structured stablecoins from other issuers that face tougher constraints and higher compliance burdens
Shin has signaled openness to the first category, provided it sits comfortably within existing prudential and payments regulation.
How banks position themselves around state-backed CBDC projects, deposit token offerings and tightly supervised stablecoin models will be a crucial indicator of their future role in Korea’s digital finance ecosystem.
To understand how central bank digital currencies could evolve globally, explore our guide on CBDCs and how they work today.
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