- The Bank of Korea will meet banks to discuss stablecoin risks and the impact on financial system control.
- New law may allow fintech firms to issue won stablecoins which concerns the central bank over policy control.
- Rising Seoul housing prices and growing debt may delay expected interest rate cuts by the central bank.
Bank of Korea Governor Lee Chang-yong will meet with major bank presidents on June 23 in Seoul. The meeting will take place at the Bankers Association Building in Jung-gu after the central bank’s board session.
The central topic of the meeting is expected to be the growing momentum behind won-based stablecoins. The Bank of Korea remains cautious about allowing non-banking institutions to issue such assets. Officials have raised concerns about risks to monetary policy control and financial system stability.
Governor Lee and Deputy Governor Park Jong-woo will both attend the meeting. The central bank has expressed concern that non-bank stablecoins could trigger rapid capital withdrawals. This could weaken monetary policy tools during emergencies and create instability in financial markets.
Increased Engagement with Bank Leaders
Governor Lee has recently increased communication with banking leaders. Last month, he visited six major banks including KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup, and IBK. Each meeting lasted about 30 minutes. He also held a follow-up session on May 26, after meeting with Tim Adams from the Institute of International Finance.
During these discussions, the Bank of Korea reviewed its digital currency projects. Project Hangang and Agora Project were both mentioned as key initiatives. These moves suggest the central bank is evaluating how its digital currency strategies align with changing conditions.
New Legislative Push Sparks Urgency
The Democratic Party of Korea has proposed new digital asset legislation. On June 10, lawmaker Min Byung-deok introduced the Basic Digital Asset Act. The bill proposes allowing won-based stablecoins and creating a presidential-level digital asset committee.
The major highlights are a reduction of the capital requirement of the issuers to 500 million won, down from 5 billion won. This would allow stablecoins to be issued by fintech companies, which is in contrast with the current position of the central bank. The proposal has left the Bank of Korea with the urgency to clarify its stand.
Housing Market Adds Further Pressure
The meeting comes amid rising concern over household debt. The third phase of the stressed debt service ratio regulation begins in July. As a result, the number of borrowers is expected to increase.
Meanwhile, house prices are increasing outside the regulated areas in Seoul. districts such as Seongbuk-gu, Nowon-gu and Geumcheon-gu have experienced significant growth. The trend could complicate monetary easing intentions, particularly whilst exchange rates are still elevated.
