Bank of Korea Eyes Public Blockchain Integration for Deposit Tokens

Highlights:

• South Korea plans to link its deposit tokens with public blockchain networks for secure digital use.
• Political leaders are urging the country to introduce a Korean won stablecoin to reduce crypto outflow.
• The Agora Project will enable cross-border token exchange while protecting each country’s monetary control.

The Bank of Korea is preparing to connect its deposit tokens to public blockchain networks, according to a report by News1. Deputy Governor Lee Jong-ryeol shared this plan during the Blockchain Leaders Club event held on Tuesday in Seoul. He said the tokens are a form of stablecoin created within the central bank’s digital currency system. The central bank aims to allow these tokens to work together with private stablecoins. This would help form a complete digital currency system under national control.

Bank of Korea explores integrating deposit tokens with public blockchains

Bank of Korea (BOK) Deputy Governor Lee Jong-ryeol said the South Korean central bank is exploring ways to integrate BOK-issued deposit tokens with public blockchains, News1 reported. Speaking at the…

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Lee explained that the Bank of Korea promotes this initiative as part of its responsibility over monetary and foreign exchange matters. He insisted that the idea of the project is to ensure strong and steady progress in digital finance. Lee drew attention to concerns about the rise of global stablecoins in the local market. He pointed out that using foreign stablecoins instead of local money could limit how monetary policy is managed. This situation may also result in money laundering and financial problems.

The Bank of Korea and numerous other central banks are examining digital currencies for the same reasons. They fear global stablecoins might lessen the importance of the currencies they manage. This research has paved the way for the Bank of Korea’s deposit token project. Deposits in commercial banks are now able to function as money after being digitized as tokens.

South Korea Faces Political Pressure to Launch KRW-Backed Stablecoin

South Korea’s political leaders have proposed creating a stablecoin linked to the won. Lee Jae-myung, a presidential candidate in the next month’s election, supports this idea. He suggested that a local stablecoin could reduce the country’s crypto asset outflow. That outflow has reached about 56.8 trillion won, or $40.8 billion. He also said it could reduce the nation’s reliance on foreign dollar-backed stablecoins.

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Min Byoung-dug, a lawmaker and chair of the Democratic Party’s Digital Asset Committee, supports the early launch. He said South Korea should lead in creating policies for stablecoins before foreign ones dominate. According to him, this would allow the country to stay strong in global digital finance. The growing use of foreign stablecoins could limit South Korea’s control over its own financial systems.

Calls from lawmakers reflect concern about national monetary control. They believe that waiting too long may increase foreign influence. Therefore, many leaders see a Korean stablecoin as necessary for financial independence. 

Agora Project Uses Blockchain to Enable Cross-Border Deposit Token Exchange

In addition to domestic efforts, the Bank of Korea has joined the Agora Project. The project brings together central banks from the United States, the United Kingdom, France, Japan, Switzerland, Mexico, and South Korea. Central Bank Digital Currencies are designed to help global financial payments with the use of digital assets and deposit tokens. Each central bank will provide special tokens that change when used outside the country.

Lee explained that if a Korean token is sent to the United States, it changes into a dollar token. This system will block tokens from being used directly in foreign countries. It also protects each nation’s monetary authority. He urged banks and financial institutions to support the project and take part in this new system.