Governor of the Bank of Korea: The value of unregulated stablecoins is unstable and may affect the stability of the financial system

Bank of Korea Governor Lee Chang-yong emphasized that discussions on the introduction of a central bank digital currency (CBDC) have now become an important task that cannot be delayed. With the recent issuance of various stablecoins, CBDC is becoming a topic that central banks can no longer postpone their research. Despite their name, unregulated stablecoins are unstable in value. If stablecoins become digital payment instruments and crowd out central bank currencies, there is a question whether the financial system can maintain stability. If stablecoins proliferate, the singleness of the currency may not be guaranteed, and even the minting of currencies and the way monetary policy is implemented may be affected. Lee Changyong said that especially in the United States, PayPal’s recently issued stable currency PYUSD is being used. Therefore, if similar stablecoins were issued by institutions with international networks, such as Visa or Mastercard, the volatility of capital flows between countries could increase and have a negative impact on monetary sovereignty. (News1)