BIS Secretary-General: "Digital Won Aligns Well with Future Monetary System Vision"

Agustin Carstens, Secretary General of the Bank for International Settlements (BIS), referred to the central bank digital currency (CBDC) being developed by the Bank of Korea as the "Digital Won," praising it as "well aligned with the vision of future monetary systems." The Bank of Korea has completed trademark registration for the 'Digital Won' mentioned by Secretary General Carstens and is actively considering it as one of the options.

On the 23rd, Secretary General Carstens delivered a keynote speech on the topic of "CBDC and Future Monetary Systems" at a seminar held at the Bank of Korea's annex conference hall in Jung-gu, Seoul, where he explained the Bank of Korea's CBDC project. Since assuming office as BIS Secretary General in 2017, he has expressed strong support for the Bank of Korea, which has been proactively advancing its CBDC initiatives at various international meetings.

This visit by Secretary General Carstens is his first to Korea in five years since November 2018. Considering that BIS mainly operates among central banks of advanced countries, this visit is interpreted as a declaration of intent to strengthen cooperation with Korea in CBDC testing. Previously, the Bank of Korea announced plans last month to conduct a "CBDC usability test" jointly with BIS, marking the first time BIS is co-conducting a CBDC pilot test with Korea.

Secretary General Carstens stated that "the Bank of Korea's CBDC project aligns well with the vision of future monetary systems," explaining, "At the center of the network is the wholesale CBDC, and the regulated banking system participates in the common ledger through tokenized deposits." CBDC, a digital form of currency issued by central banks, is divided into retail and wholesale types depending on its scope and users, with the current test focusing on wholesale CBDC.

The core of the future monetary system mentioned by Secretary General Carstens is the "integrated ledger" and "tokenization." The integrated ledger bundles various transactions related to financial markets and services into a programmable common platform, enabling real-time instant settlement and atomic settlement of all assets. Tokenization records money and assets digitally on a programmable ledger, serving as the foundation for operating the integrated ledger.

He emphasized, "From the monetary system perspective, the core of the 'Digital Won' project feels familiar as it is technically improved, but other aspects of the project architecture are entirely new." He added, "This includes an interconnection platform interacting with the currency ledger, allowing for the application of various use cases and enabling the platform to respond more flexibly and openly to market development."

In particular, he highlighted the significance of the collaborative relationships during the execution process beyond the design and technical sophistication of the 'Digital Won' project. He said, "this project involves the Bank of Korea as well as major domestic regulatory bodies such as the Financial Services Commission and the Financial Supervisory Service, and legal issues have either been resolved or are being addressed." He stressed, "Such a collaborative approach is crucial to realizing visions like the integrated ledger."

Secretary General Carstens emphasized that building future financial systems requires tokenized central bank money, i.e., wholesale CBDC, and tokenized commercial bank deposits. Even if wholesale CBDC is introduced, individuals may not feel much difference as they will still save and transact through bank accounts, but the time delays caused by transactions through third-party intermediaries will disappear, and convenience will increase by enabling purchases of stocks and financial assets without additional costs.

He stated, "Tokenizing the monetary system is just the beginning. To fully leverage the benefits of new technologies applied to everyday financial transactions, we need to set bolder and broader goals." He added, "In particular, the goal should be to tokenize claims on other financial and real assets beyond tokenized currency, such as government bonds, stocks, or real estate registries."

Meanwhile, the Bank of Korea plans to accelerate the CBDC usability test following Secretary General Carstens' visit. In August, it completed trademark registration for CBDC name candidates including 'Digital Won.' A Bank of Korea official said, "It is meaningful that the BIS Secretary General personally visited Korea and mentioned future currency while BIS is jointly conducting tests with the Bank of Korea," adding, "It shows that BIS is seriously committed to this effort."