TLDR:
- The Bank of Korea fears stablecoin could weaken control over monetary policy.
- Governor Lee warns of regulatory confusion if stablecoins bypass banking system.
- Eight banks form consortium to launch a Korean won-backed stablecoin.
- Regulators face pressure to balance financial innovation with policy stability.
The Bank of Korea is sounding the alarm over the rapid growth of non-bank issued won stablecoins. As traditional financial institutions step into the digital currency space, central bankers warn of possible regulatory and policy confusion.
With stablecoin developments accelerating, authorities now face a challenge in balancing innovation with financial stability. The recent move by eight major banks into a joint stablecoin venture has added urgency to this conversation.
Regulatory clarity and coordination are becoming critical as Korea navigates a changing digital asset landscape.
Central Bank Raises Concerns Over Monetary Control
At a press briefing held on July 10, Bank of Korea Governor Lee Chang-yong voiced concerns about stablecoins issued outside the banking sector.
He cautioned that widespread issuance of private won-backed tokens could create confusion similar to past private currency disruptions. According to Lee, such a system would challenge the Bank of Korea’s ability to conduct effective monetary policy.
The governor said handling payments outside the traditional banking system may force a return to centralized models.
Additionally, he noted the potential clash with South Korea’s foreign exchange liberalization framework. These developments, he said, require collaboration across ministries to set a clear direction.
Governor Lee further highlighted that non-bank stablecoin activity could alter the profit structure of conventional banks. As settlement services move beyond banks, their core revenue streams may shift.
Lee emphasized that allowing such transformations without coordinated policy decisions would be premature.
He said the central bank could not decide the stablecoin issue on its own. Once new ministry heads take office, discussions will resume to determine next steps. Lee’s remarks reflect increasing pressure to manage innovation without disrupting the country’s financial order.
Eight South Korean Banks Launch Stablecoin Consortium
Meanwhile, eight major banks took active steps into the stablecoin sector.
According to a post by Wu Blockchain late last month, they are collaborating with the Open Blockchain and DID Association and the Financial Settlement Institute. Their goal is to develop a Korean won stablecoin through a joint venture.
Eight major banks in South Korea are working with the Open Blockchain and DID Association and the Financial Settlement Institute to establish a Korean won stablecoin joint venture. This project is the first time that the banking industry has entered the digital asset field in the…
— Wu Blockchain (@WuBlockchain) June 25, 2025
This marks the first time banks in South Korea are entering the crypto market as a unified group. The project will explore two stablecoin models, trust-based and deposit-linked. This coordinated move suggests the banks are preparing for a more digital financial future.
With banks now actively pursuing stablecoins, regulators must address possible overlaps with existing monetary and exchange policies. The entry of regulated banks adds legitimacy but also raises the stakes for getting the framework right. Authorities will need to act swiftly to create rules that support innovation while protecting macroeconomic stability.
The post BOK Governor Raises Red Flag Over Stablecoin Impact on Monetary Policy appeared first on Blockonomi.
Source: https://blockonomi.com/bok-governor-raises-red-flag-over-stablecoin-impact-on-monetary-policy/