During a joint industry and academic event covering stablecoins, the Bank of Korea’s Head of its Digital Currency Research Lab discussed stablecoins, suggesting they need a central bank backstop.
As context, Korean banks recently formed a consortium to explore stablecoins, resulting in a delay in the next phase of a central bank tokenized deposit and wholesale CBDC trial. Following June’s elections, the new government plans to introduce stablecoin legislation.
An early legislative draft gave the central bank very limited involvement in stablecoin supervision, although that framework has since evolved. The central bank has consistently expressed strong reservations about stablecoins on several occasions.
“It is not a new currency but rather an existing currency tokenized on a distributed ledger,” said the central bank’s Yun Sung-guan, adding “in order to operate in a stable manner, a backstop from the central bank is ultimately necessary.”
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