[The Editors' Verdict] Amid Won Weakness, Rushing Stablecoins Without Sophisticated Design Is Dangerous

Rushing Means Risk: Design Standards in an Era of Won Volatility
Shortage of Short-Term Bonds, Rapid Capital Flows... Confronting Korea-Specific Constraints
For Korean Stablecoins, What Matters Now Is Precision, Not Speed

The real value of the Korean won has dropped to its lowest level since the financial crisis, heightening market anxiety. In periods of increased exchange rate volatility, the demand for “value stability” across all financial products rises. Stablecoins are no exception. Although discussions on introducing won-based stablecoins have recently gained momentum, in the current environment, the sophistication of their design is more important than the timing of their introduction. Without meticulous design, stablecoins could become a source of systemic risk rather than innovation.

The stability of a stablecoin is determined by a combination of factors, including the composition of reserve assets, redemption mechanisms, liquidity management, operational capability, and information disclosure. In particular, during periods of exchange rate instability, issuer risk increases, and even minor uncertainties can undermine trust. Questions about whether reserve assets are sufficiently safe, whether redemptions are sustainable, and whether market confidence can be maintained become even more stringent when the won is weakening.

Korean-style stablecoins face structural constraints. Major overseas stablecoins ensure stability through cash, deposits, and short-term government bonds, but Korea’s limited issuance of short-term government bonds makes it difficult to apply the same structure. If long-term government bonds are used as reserve assets, interest rate risk increases, potentially undermining the 1:1 value peg. This is not merely a technical issue but is directly linked to the asset structure of Korea’s financial market. This is why it is essential to clearly recognize the unique characteristics of the Korean market and establish new principles for reserve assets from the initial design stage.

The speed of capital movement is also a key variable. Korea is sensitive to foreign exchange market volatility, and capital flows move quickly. If stablecoins are introduced, funds could move between personal wallets, be exchanged with overseas stablecoins, and transfer between exchanges more rapidly and broadly than under the existing regulatory framework. Especially during periods of exchange rate instability, there is a higher risk of unexpected capital outflows abroad. Simple regulation alone may not provide sufficient control; it is essential to design incentive structures to channel funds onshore and ensure international interoperability.

From the perspective of financial system stability, design precision is also crucial. Even a slight loss of confidence in a stablecoin can trigger a sudden surge in redemption requests, and the sale of reserve assets could simultaneously shock short-term interest rates, as well as the bond and foreign exchange markets. If the launch of a stablecoin coincides with a period of won weakness, even a minor malfunction could lead to systemic risk. The current market environment raises a clear question: “What impact would a poorly designed stablecoin have?”

It is also important to objectively assess that Korea’s payment and remittance infrastructure is already globally competitive. Most indicators, such as real-time transfers, mobile payment penetration, and card fees, are advanced. Therefore, it is necessary to thoroughly verify in advance how much additional benefit stablecoins can actually bring to the domestic payment environment. If the utility is limited but structural risks increase, design standards must be even stricter. Given the strong platform dominance in Korea, there is also the possibility that stablecoins could function as quasi-currency within certain platform ecosystems. This could conflict with monetary policy and financial stability, making institutional safeguards more important than ever.

Ultimately, the key issue in the discussion of stablecoin introduction is not “when” but “how.” The won may continue to weaken or stabilize. In either case, a won-based stablecoin is likely to emerge as a practical option in the future. Therefore, now-when vulnerabilities and warning signs are evident-is the time to raise design standards, test various scenarios, and establish institutional mechanisms. The current weakness of the won offers a clear lesson: a meticulously designed stablecoin is an innovation, but a stablecoin introduced without such precision is a risk. The weaker the won, the more precise a won-based stablecoin must be.