Latest news with #RheeChang-yong
Bloomberg
4 days ago
- Business
- Bloomberg
BOK's Rhee Says Tariff Hit to Growth Remains Problem for Policy
The Bank of Korea remains concerned at the tariff impact on economic expansion rather than inflation and is judging how to keep cutting interest rates while weighing stability risks, according to Governor Rhee Chang-yong. With South Korea unlikely to retaliate strongly to US levies, Chinese export costs falling and domestic growth below potential, policymakers in Seoul are determining their next easing move, he signaled during a panel discussion at the European Central Bank's annual forum in Sintra, Portugal.
Korea Herald
4 days ago
- Business
- Korea Herald
Stablecoin hype dims BOK's CBDC ambitions
Central bank's 'Han River' project loses traction due to high cost, low feasibility South Korea is poised to take a major step in digital finance with the push for a stablecoin tied to the Korean won. But as enthusiasm for private-led innovation grows, the Bank of Korea's central bank digital currency project appears to have lost steam. The shift underscores the country's lack of a coherent road map for institutionalizing digital assets while it reaches a pivotal moment in its digital finance transition. BOK backs off The BOK recently notified local banks that the second part of its central bank digital currency testing program, titled 'Project Han River,' has been put on hold. In April, the central bank kicked off the first part of the pilot test, testing the feasibility of a digital currency. Through a three-month test period, participants used tokenized deposits to purchase goods and services. The second leg of the pilot project was to take place in the fourth quarter, testing additional features such as person-to-person transfers and a simplified verification process. But the BOK has suspended the plan. "We plan to resume testing after thoroughly reviewing institutional changes, such as the clarification of stablecoin-related legislation. Once uncertainties are somewhat resolved, we will discuss effective testing measures with participating institutions," a BOK official said. The suspension stems from the participating banks' uneasiness with the project, burdened by excessive costs of setting up the infrastructure for testing. The banks reportedly spent a combined 30 billion won ($22 million) on the first part of the project, a large amount when considering the absence of a clear timeline for full-scale implementation. According to a report filed by the Korea Federation of Banks, an entity representing the local lenders here, the banks shared they have 'different thoughts' on the CBDC with the BOK in a meeting held with Gov. Rhee Chang-yong on June 23. Are stablecoin, CBDC at odds? While banks remain doubtful about the implementation of a CBDC, they are eager to take the lead in the won-backed stablecoin market. Over recent weeks, banks have been competitively filing trademark applications, combining KRW, the currency code for the Korean won, with abbreviations of their names. They are also launching task forces and seeking to launch joint ventures with tech partners. "Stablecoins are not a far-fetched idea. They have already become a part of the economy," an official from a local lender said. "Stablecoins allow for more concrete business discussions, while the institutionalization of CBDCs remains uncertain." Both serve a similar role as a means of currency, maintaining a steady valuation by being pegged to a fiat currency. Though the two digital currencies are not inherently contradictory, the growing momentum for stablecoins could push back the incorporation of CBDC. If a stablecoin establishes itself as a major means of the digital asset market, the CBDC could lose ground. On the verge The question now lies in who will be allowed to issue the new financial instrument. The ruling Democratic Party of Korea has proposed to allow nonbanking entities to issue won-backed stablecoins. The BOK remains cautious on the move, as the unchecked issuance of won-based stablecoins by nonbanking entities could undermine the effectiveness of its own policy tools. Experts highlight that Korea is at a crucial turning point in shaping its digital financing landscape. 'When it comes to changes in the finance sector, it is always a question of finding a balance between stability and innovation. For the time being, Korea is on the brink of transformation,' said Lee Hyo-seob, a senior research fellow at Korea Capital Market Institute. 'Now is the time to prioritize innovation and in such perspective, nonbanking institutions can play a bigger role.'
Korea Herald
18-06-2025
- Business
- Korea Herald
BOK chief backs need for won-based stablecoin, warns of FX risks
Central bank notes price growth slowing, but pandemic-era surges still weigh on consumers Bank of Korea Gov. Rhee Chang-yong said Wednesday that he is not opposed to the issuance of a Korean won-pegged stablecoin and, in fact, sees a need for it. When asked whether the issuance of a won-based stablecoin could trigger inflation by increasing the money supply, Rhee clarified his position. 'I do see the need for a won-backed stablecoin. Let me be clear — I am not against it,' he said during a press conference held at the central bank's headquarters. He added that the impact of such a stablecoin on the monetary system would depend on the form of issuance and the type of assets backing it. However, Rhee raised concerns over potential challenges to foreign exchange controls. 'If a won-based stablecoin is issued, it could facilitate the conversion of won-denominated assets into dollar-based stablecoins, which could increase demand for foreign stablecoins and complicate forex management,' he said. The ruling Democratic Party of Korea has been pushing to allow non-banking institutions to issue a won-based stablecoin. 'We would need to consider the broader implications for bank profitability and structural changes if payment and settlement functions — traditionally handled by banks — are expanded to the non-banking sector," Rhee said. He added that the central bank would work with the Ministry of Economy and Finance and the Financial Services Commission to establish appropriate measures as soon as possible. Wednesday's press conference was also held to review the current inflation trend in Korea. In the first five months of 2025, consumer prices rose 2.1 percent — slightly higher than the 1.8 percent increase seen in the last six months of 2024, but still near the central bank's target of 2 percent. 'The pace of growth has stabilized, but prices remain elevated due to the sharp rise that occurred during the COVID-19 pandemic,' Rhee said. From 2021 to May 2025, overall consumer prices increased by 15.9 percent. Meanwhile, the cost of living index — which includes a selected subset of essential items — rose 19.1 percent during the same period, outpacing general inflation by 3.2 percentage points and highlighting rising household burdens. The Bank of Korea also commented on the potential inflationary impact of recent US tariff measures. The central bank noted that the tariffs could actually help ease inflationary pressure in Korea, given its heavy reliance on exports to both the US and China. The logic: weaker global demand could lead to lower raw material prices. Additionally, if China redirects its low-cost goods to markets like Korea due to reduced exports to the US, it could create further deflationary pressure. However, the BOK emphasized the uncertainty surrounding these projections. 'Since the implementation and scope of tariffs could vary depending on negotiation outcomes, factors such as won depreciation or partial supply chain disruptions could offset any downward pressure on prices,' the central bank said in a statement.
The Star
18-06-2025
- Business
- The Star
BOK chief says he is not against won-based stablecoins but has forex concerns
FILE PHOTO: Rhee Chang-yong, Governor of the Bank of Korea, participates in a panel titled 'How Should Central Banks Battle High Inflation?' at the 2023 Spring Meetings of the World Bank Group and the International Monetary Fund in Washington, U.S., April 14, 2023. REUTERS/Elizabeth Frantz/File Photo SEOUL (Reuters) -South Korea's central bank governor said on Wednesday he was not against issuing won-denominated stablecoins but had concerns about managing capital flows. "Issuing won-based stablecoin could make it easier to exchange them with dollar stablecoin rather than working to reduce use of dollar stablecoin. That in turn could increase demand for dollar stablecoin and make it difficult for us to manage forex," Rhee Chang-yong told a press conference in Seoul. Stablecoins, a type of cryptocurrency designed to maintain a constant value – typically pegged 1:1 to the U.S. dollar – are widely used by crypto traders to move funds between tokens, and are starting to be adopted by more and more companies. Regulators in many countries are skeptical about cryptocurrencies as they are seen as speculative and as competitors to national currencies. Rhee's comments come as South Korea's left-leaning President, Lee Jae Myung, is seen delivering on his election pledge to allow companies to issue won-based stablecoins. The ruling Democratic Party proposed earlier this month the Digital Asset Basic Act, designed to set up regulatory infrastructure needed to help local companies issue won-denominated stablecoins. President Lee appointed a former crypto firm chief, Kim Yong-beom, as his chief policy officer in his first week in office, further boosting speculation that the government would take action to allow issuance of stablecoins backed by the Korean won. Kim has previously served as vice chairman of the Financial Services Commission before becoming chief executive of Hashed Open Research, a think tank affiliated with crypto venture capital firm Hashed Ventures Inc. Governor Rhee has previously told reporters that allowing stablecoins to be issued by local companies, rather than the central bank, could significantly undermine the effectiveness of monetary policy and capital flow control. (Reporting by Jihoon Lee; Editing by Tom Hogue and Muralikumar Anantharaman)
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Korea Herald
02-06-2025
- Business
- Korea Herald
[Photo News] BOK–Fed talks on digital finance
Bank of Korea Gov. Rhee Chang-yong (left) and Christopher Waller, a member of the US Federal Reserve Board of Governors, hold a policy dialogue during the 2025 BOK International Conference at the central bank's headquarters in Seoul on Monday. The two policymakers discussed the outlook for stablecoins and central bank digital currencies, and how such digital assets could reshape the global financial system.(Yonhap)
