Hyun Song Shin's 'Alma Mater' BIS: "Stablecoins difficult to be a core pillar of the monetary ecosystem"

Hyun Song Shin's 'Alma Mater' BIS: "Stablecoins difficult to be a core pillar of the monetary ecosystem"

When asked about Shin's remarks on 'CBDC complementation', a difference in opinion was revealed

Adjusting the 'frequency' amid the ruling party's drive... BIS General Manager to give a related speech today

Regarding Hyun Song Shin, the nominee for Governor of the Bank of Korea, taking a progressive stance on stablecoins, the Bank for International Settlements (BIS), where he worked for 12 years, expressed a differing opinion.

On the 20th, in response to a Yonhap News inquiry about Shin's statement that 'stablecoins can be used complementarily and competitively with deposit tokens,' the BIS replied, "When compared to the three core criteria of singleness, elasticity, and integrity, stablecoins do not meet the requirements to become a mainstay of the monetary system."

The BIS added that it "does not discuss individual national policies" but reaffirmed its existing position in principle.

This is interpreted as a somewhat different tone from Shin's remarks at the parliamentary confirmation hearing on the 15th.

Shin said at the time, "It is true that I was negative about stablecoins and virtual assets in the past," adding, "I have also established a theoretical framework to some extent."

He continued, "However, in a position leading the central bank, one must consider how to develop the ecosystem in a mutually complementary way by gathering the opinions of various entities rather than just one's own."

He also said, "I have thus organized my position."

Shin's new stance is a significant retreat from the rigid position of the BIS, which he spearheaded in establishing, and is almost consistent with the Bank of Korea's adapted position to suit domestic circumstances.

Regarding this issue, the Bank of Korea, influenced by the BIS, initially argued that CBDC-based deposit tokens could replace stablecoins, but later took a step back, suggesting that only bank-centric stablecoins should be allowed first.

However, as political discussions leaned towards making it difficult to block non-bank entry, the Bank of Korea compromised once more by proposing measures to supplement the system at the issuance authorization stage.

In this regard, Governor Rhee Chang-yong mentioned in an interview with a foreign media outlet in July last year, "We need to recalibrate our plans."

It is also interpreted that Shin, less than a month after retiring from the BIS and returning to Korea, adjusted his 'frequency' to align with the Bank of Korea's existing position.

The introduction of KRW-based stablecoins was a presidential campaign pledge by Lee Jae-myung, and the ruling party, which was promoting related legislation, welcomed Shin's change of stance.

In particular, the Democratic Party's Digital Asset Task Force (TF) accelerated the process, urging to not wait for the government's proposal but to first submit the bill to the National Assembly's Political Affairs Committee's legislative subcommittee to begin discussions.

As a result, stablecoin-themed stocks surged one after another.

The divergence between Shin and his 'alma mater' BIS regarding digital assets is expected to become more prominent.

The BIS informed Yonhap News that "Pablo Hernández de Cos, General Manager of the BIS, is scheduled to give a speech at the Bank of Japan today (20th), and stablecoins will also be covered."