The Governor of the Central Bank of Korea warns: If the Korean won introduces stablecoins, it will lead to a collapse in the Exchange Rate and capital outflow.

South Korea's central bank governor Lee Chang-yong warns: If the Korean won stablecoin is rashly introduced, it may trigger dramatic fluctuations in the exchange rate and capital outflows. The internal regulatory stance in the National Assembly continues to heat up (Background: South Korea plans to amend the law to “include stablecoins under foreign exchange controls,” treating StableCoin for the first time as a legal currency) (Background: With the appointment of Lee Ik-hwan, the South Korean version of “Gary Gensler,” will the local crypto market lose its attractiveness under strict regulation?) On the 29th, at a National Assembly hearing, Bank of Korea (BOK) Governor Lee Chang-yong expressed, “I am really afraid,” sounding the alarm for the implementation of the Korean won stablecoin. He pointed out that if the Korean won stablecoin is fully circulated before foreign exchange controls are adequately established, massive funds could flow overseas in an instant, leading to severe fluctuations in the exchange rate and even shaking the country's financial stability. Following his remarks, the discrepancies between the supporting and opposing factions in the National Assembly were immediately brought to the forefront. The central bank governor's anxiety: Cross-border transfers could become the trigger. According to South Korea's Yonhap News Agency, Lee Chang-yong admitted at the hearing that stablecoins are “anonymous and easy to carry,” making it easy to take them out of the country. “Many people will take the Korean won stablecoin overseas, so I am really afraid.” He believes that as long as there is an arbitrage opportunity, large-scale capital outflows could occur in a short time, further amplifying fluctuations in the foreign exchange market, making it difficult for the central bank to accurately implement exchange rate policies. Assembly member Ahn Doo-jek argued that “the faster it is activated, the more innovation can be seized,” indicating a stark difference in their positions and showing that the regulatory path has yet to be determined. Seven major risks emerge: The word “stable” does not guarantee safety. The Korea JoongAng Daily compiled seven major concerns from the central bank regarding stablecoins, including depeg, bank run, weakening monetary policy, stimulating capital outflows, diluting the role of banks, potential use for money laundering, and exacerbating systemic risks. Recently, the trading volume of dollar stablecoins related to South Korea has surged, putting pressure on regulatory authorities who feel the funds are “quietly fleeing.” Lee Chang-yong emphasized that the commitment to stablecoin payments comes from private contracts, lacking deposit insurance or central bank guarantees, “Once a bank run occurs, the price of the stablecoin may instantly depeg.” “Bank first”: Define pilot projects before discussing full opening. In the face of risks, Lee Chang-yong proposed a “bank first” model: first, have strictly regulated banks issue Korean won stablecoin pilot projects, and after establishing foreign exchange controls and liquidity reserve frameworks, gradually expand the circulation scope. The Financial Services Commission of South Korea is preparing to require issuers to hold more than 100% high liquidity assets and prohibit interest payments to reduce the incentive for bank runs. Lee Chang-yong added that the commitment of “1 coin = 1 Korean won” can only gain sufficient credibility once included in the banking regulatory framework. The tug-of-war between innovation and stability: South Korea chooses to be cautious. While central banks globally actively research digital assets, South Korea has decided to prioritize “financial stability.” Having experienced the 1997 Asian financial crisis and the recent Terra/Luna collapse, regulatory authorities are particularly sensitive to foreign exchange stability and systemic risks. Although stablecoins can reduce cross-border payment costs and increase transaction efficiency, South Korean authorities prefer to take a cautious approach rather than allowing the market to test mistakes on its own. Observers believe that the “bank first” plan provides a reference path for emerging market countries: first integrate stablecoins into existing financial regulations, ensuring reserves, liquidity, and transparency are in place, before discussing proliferation and innovation. Lee Chang-yong's warning makes it clear that the Korean won stablecoin cannot be implemented all at once. The tug-of-war between innovation and regulation will continue, but it is certain that South Korea chooses to welcome the next wave of digital finance only after ensuring that the foreign exchange safety net is sufficiently robust. Related reports: Fed Philadelphia Chair Harker signals dove! “There should be two more rate cuts within 2025; tariffs are only short-term”. Powell states that “tariffs are not the main cause of inflation,” emphasizing that politics does not affect the Federal Reserve's stance: there may be further rate cuts. The Federal Reserve cut rates by 25 basis points in September's FOMC meeting, Powell asserts that “the impact of tariffs is limited,” with Bitcoin breaking above 117,300. <South Korea's central bank governor warns: If the Korean won introduces stablecoins, it will lead to a collapse in exchange rates and capital outflows> This article was first published in BlockTempo, the most influential Blockchain news media.