Like the Genius Act's "Stablecoin Certification Review Committee" in the US
A policy body needed with participation from the Ministry of Economy and Finance, Financial Services Commission, and Bank of Korea
Stricter review for non-bank institutions outside the regulatory system, such as requiring unanimous approval, to minimize risks
As discussions on the introduction of a won-based stablecoin are gaining momentum, the Bank of Korea has proposed to the government a plan that would require consensus among relevant agencies before permitting the issuance of stablecoins. Governor Rhee Changyong of the Bank of Korea, who has repeatedly raised concerns about stablecoins, suggested the establishment of a policy body based on inter-agency agreement as a means to minimize risks such as the potential circumvention of capital regulations. The Bank of Korea recently communicated this position officially to the National Planning Committee.
The Bank of Korea highlighted that the United States' Genius Act, which regulates stablecoins, stipulates the creation of a Stablecoin Certification Review Committee (SCRC). The Bank emphasized that, similarly, consensus among relevant agencies, including the Bank of Korea, is necessary at the approval stage of issuing a won-based stablecoin. The SCRC is an independent committee responsible for reviewing and certifying new stablecoins. It includes participation from the U.S. Department of the Treasury and the Federal Reserve, the U.S. central bank. In particular, the SCRC requires unanimous approval from its members when permitting stablecoin issuance by listed companies that provide non-financial services.
The Bank of Korea has consistently stressed that allowing won-based stablecoins without a proper regulatory framework in place would significantly increase the risk of circumventing capital regulations, making it essential to have sufficient discussions among government ministries regarding institutional arrangements prior to introduction. The Bank also pointed to the credit risk of stablecoin issuers and the risk of a coin run (large-scale coin withdrawals) due to failures in managing reserve assets as additional risk factors. If there is a need to swiftly introduce a won-based stablecoin to keep pace with global financial innovation, the Bank argued that it should first be introduced within the banking sector, which is already under regulatory oversight, to assess risks. Only after establishing additional necessary systems for broader implementation should the introduction be expanded sequentially to non-bank institutions.
Governor Rhee has repeatedly emphasized that permitting issuance by non-bank institutions without sufficient preparation could accelerate capital outflows and weaken the effectiveness of central bank monetary policy. He noted that the influx of private currencies could make it more difficult to control the money supply, and that, in addition to monetary policy, issues such as capital flow management and banking functions are also involved. Previously, Jerome Powell, Chair of the Federal Reserve, and Christine Lagarde, President of the European Central Bank (ECB), also underscored the need for a regulatory framework to protect money as a public good.
A Bank of Korea official stated, "The introduction of a won-based stablecoin would affect monetary policy, financial stability, and payment and settlement systems. As the central bank, we are communicating our concerns while also considering the demands of the new market, seeking ways to address these concerns through appropriate institutional arrangements. (This latest proposal) is part of this approach," adding, "We will actively coordinate with relevant agencies such as the Ministry of Economy and Finance and the Financial Services Commission as soon as their teams are in place."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
